Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (48925)	1/6/2012 2:47:50 PM
From: DuckTapeSunroof	Read Replies (2) \| Respond to of 71588

Report says Romney, Gingrich and Perry tax plans add billions to deficit, favor the rich By Brian Montopoli Brian Montopoli Topics Campaign 2012 January 6, 2012 1:21 PM cbsnews.com The tax plans put forward by Mitt Romney, Newt Gingrich and Rick Perry would add hundreds of billions of dollars to the U.S. budget deficit, according to a series of analyses from the nonpartisan Tax Policy Center in Washington. The latest analysis from the group, a joint venture of the Urban Institute and the Brookings Institution think tanks, found the Romney plan would lower federal revenues by $600 billion in 2015. The finding comes from comparing Romney's proposed tax plan to current law, which mandates the expiration of the Bush-era tax cuts and other tax cuts at the end of the year. When compared to current policy, not current law, the Romney plan would lower federal revenues by $180 billion, the group found. Among Romney's proposals are to extend the Bush-era tax cuts, repeal the federal estate tax and reduce the corporate income tax rate from 35 to 25 percent. According to the Tax Policy Center, the tax cuts in Romney's plan go disproportionately to the highest earners. Those making more than $1 million would see an average tax cut of more than $295,000, while those making less than $40,000 would see an average tax cut of less than $1,000. Those making less than $75,000 per year would see their average federal tax rate decrease by less than 3 percent; those making more than $1 million would see an average decrease of more than 9 percent. Full CBS News coverage: Mitt Romney Gingrich's plan, which includes an optional, 15 percent flat tax and a larger cut in the corporate income tax rate, would expand the federal debt even more, according to the Tax Policy Center, reducing revenues by $1.28 trillion in 2015 compared to current law. (That figure is $830 billion when compared to current policy.) Under Gingrich's plan, if those for whom it makes economic sense choose the flat tax plan and the rest stay in the current system, those making more than $1 million would see an average tax cut of more than $750,000, according to the center - an average cut of more than 24 percent in their federal tax rate. Those making less than $75,000 would see an average reduction of less than five percentage points. Full CBS News coverage: Newt Gingrich Perry's plan, which also includes an optional flat tax (his at 20 percent) would lower federal revenues by $995 billion in 2015 compared to current law, according to the Tax Policy Center - a 27 percent cut in total projected revenue. (The figure is $570 billion when compared to current policy.) The group found Perry's plan also favors high earners, giving those making over $1 million an average tax cut of nearly $650,000 and reducing their average federal tax rate more than 20 percent. Those making less than $75,000 would see their average federal tax rate fall by less than 3 percent. The Tax Policy Center has not completed analyses for the other candidates still in the race. The candidates whose plans have been studied dispute the findings, arguing that the tax cuts will have a simulative effect and thus increase revenue in ways not acknowledged in the analysis. Full CBS News coverage: Rick Perry Full coverage: Campaign 2012

To: DuckTapeSunroof who wrote (48925)	1/10/2012 5:57:48 PM
From: TimF	Read Replies (2) \| Respond to of 71588

Dynamic analysis is likely to be an improvement, but its rather hard, and also depends on the assumptions you use. In a sense static anaylisis is a special case of dynamic analysis, with the assumption that people don't respond to the factor your changing. That's often a rather silly assumption because people respond to incentives, but the problem is its not often clear exactly how or how strongly people will respond. Judging by historical evidence, there is a significant deadweight loss from taxation that increases as tax rates increase. In addition to the deadweight loss, you also get more avoidance and evasion as taxes go up. In the short to medium run most tax cuts do probably decrease revenue, even when you consider the dynamic response (except from very high tax rates, or taxes on investments), but 1 - The short run harm to the private sector is greater than the short run increase in revenue. and 2 - Long run the increase in economic growth, can cause the net result of the tax cut to be higher revenue, esp. when you add it to the decreases in avoidance and evasion, which happens short, medium and long term. OTOH tax policy doesn't stay static for the long term, and even without changing it tax policies there are so many factors in a real world economy that it can be hard to know the exact result of one of them.