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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TigerPaw who wrote (287549)	5/10/2006 5:52:04 PM
From: combjelly	Read Replies (1) \| Respond to of 1571724

"Stimulation from the tax cut was negligible." In 2005, the Congressional Budget Office released a paper called "Analyzing the Economic and Budgetary Effects of a 10 Percent Cut in Income Tax Rates" [2] that casts doubt on the idea that tax cuts ultimately improve the government's fiscal situation. Unlike earlier research, the CBO paper examines the budgetary impact of any possible macroeconomic effects of tax policies, i.e., it attempts to account for how tax cuts affect the overall size of the economy, and therefore influence future government tax revenues; and ultimately, deficits or surpluses. The paper's author forecasts the effects using various assumptions (e.g., people's foresight, the mobility of capital and the ways in which the federal government might make up for the lost revenue). Even in the paper's most generous scenario, only 28% of lost tax revenue is recouped over a 10-year period after a 10% tax-rate cut. The paper points out that these shortfalls in revenue would have to be made up by federal borrowing: the paper estimates that the federal government would pay an extra $200 billion in interest over the decade covered by his analysis. The 10% tax cut would result in a 1% increase in gross national product. The paper appears to focus on Federal government revenue only and does not look at the total public sector revenue (i.e., it does not include increases in local and state government revenue). en.wikipedia.org

To: TigerPaw who wrote (287549)	5/10/2006 6:02:24 PM
From: Tenchusatsu	Read Replies (2) \| Respond to of 1571724

TP, The fiction of the Laffer curve is that revenues rise because the economy is stimulated by the lower taxes. That might be true if the taxes were outrageous but that was not the case in Reagan or any Bush term. You're debating where the apex of the Laffer Curve is, not the validity of it. If you think a 50% tax rate (counting Federal, State, Local, FICA, Medicare, etc.) represents the apex of that curve, then you're entitled to your opinion. If only the truly rich actually paid that much. If only raising the rates on the top tax brackets made the truly rich pay more ... Tenchusatsu