NationStates Jolt Archive

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027

They are against it because it makes them lose elections.

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027
Because tax cuts mean that less money is available for many worthwhile government programs, like public education. Public education trains the workers and entrepreneurs of the future so that we can build new industries.

Tax cuts do stimulate the economy somewhat, but they come at a price.

Because tax cuts mean that less money is available for many worthwhile government programs, like public education. Public education trains the workers and entrepreneurs of the future so that we can build new industries.

Tax cuts do stimulate the economy somewhat, but they come at a price.

Tax cuts can actually attract more revenue for the government and that means more money for government programs. Afterall government programs are useless if the economy is tanking (Argentina).

Tax cuts can actually attract more revenue for the government and that means more money for government programs. Afterall government programs are useless if the economy is tanking (Argentina).
There has to be a balance. When you cut taxes beyond a certain point the loss of revenue outpaces the economic growth.

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027
Reagan's 'boom' was more the result of the saturday night special finally getting a handle on inflation. Remember, Reagan's 'boom' also busted towards the end of his presidency, eventually leading to the electoral defeat of bush 41.


That said, I think that this recovery has more to do the fact that the entire world economy is turning around more then anything a president has done. Cheer Greenspan, not Bush.

Basically, labelling oneself "Republican" creates social pressure to be opposed to everything and anything those labelled "Democrats" advocate, and vice versa. Currently, Republicans are held to favor tax cuts to boost the economy, while Democrats are held to ignore tax raises in favor of social gains. This will flip-flop around some as the politicians put on different masks and set American vs American in some new and improved way, some mild and meaningless compromises are made, and after a good deal of tugging and yanking designed to exhaust everyone involved and increase voter apathy, turning the nation more and more into an oligarchic socialist state with a mixed economy and dwindling rights.

But yeah, tax cuts are good, in general. They wouldn't be necessary if our taxes weren't currently at 150%, but whatever.

A great unemployment report, solid wage gains, and robust consumer spending.

Almost all of the July jobs were in good fields; even manufacturing did well once the jobs lost due to temporary shutdowns were removed, with 3,200 jobs created in high tech. 54000 jobs came from high paying financial and technical/professional services (which includes software engineers and computer systems designers +2,200 jobs) and 30,000 in healthcare.

I suppose Dems have their reasons, but i'm not sure what they are to be exact. I'm not sure they know for sure either. Their usual response is that it benefits the wealthy, but they don't go into detail. I tihnk the main reason they don't like it is because they end up having less money to spend on pork projects and it shrinks government somewhat. But i'm just guessing as to why they're against it.

Because tax cuts mean that less money is available for many worthwhile government programs, like public education. Public education trains the workers and entrepreneurs of the future so that we can build new industries.

Tax cuts do stimulate the economy somewhat, but they come at a price.

I'm not sure that's necessarily true, because the stimulated economy creates more jobs, etc., and produces more income to tax at a lower rate. The theory is that you come out ahead, tax wise.

There is some evidence to prove this, but I'll be man enough to admit I don't have the economic knowledge to back up my statement.

There has to be a balance. When you cut taxes beyond a certain point the loss of revenue outpaces the economic growth.

Government sector growth is superficial. Private sector growth is more important.

I'm not sure that's necessarily true, because the stimulated economy creates more jobs, etc., and produces more income to tax at a lower rate. The theory is that you come out ahead, tax wise.

There is some evidence to prove this, but I'll be man enough to admit I don't have the economic knowledge to back up my statement.
What you're referring to is a laffer curve. The rub is, no one has ever proven it, nor has anyone ever found exactly where the peak is. We could be on either side of it. Some studies say that the laffer curve, rather then suggesting lower tax rates, actually suggests a tax rate of 80(!) percent.

Government sector growth is superficial. Private sector growth is more important.
Government sector growth is not superficial. Government provides the infrastructure, security and much of the training that makes the US economically competative. Also it contributes to quality of life. Being rich doesn't make stepping over dead homeless people or drinking contaminated water any more pleasant.

I suppose Dems have their reasons, but i'm not sure what they are to be exact. I'm not sure they know for sure either. Their usual response is that it benefits the wealthy, but they don't go into detail. I tihnk the main reason they don't like it is because they end up having less money to spend on pork projects and it shrinks government somewhat. But i'm just guessing as to why they're against it.
i do not believe that there is ANYONE in our government, regardless of political affiliation, who ardently strives to give up their governmental power. just sayin.

Government sector growth is not superficial. Government provides the infrastructure, security and much of the training that makes the US economically competative. Also it contributes to quality of life. Being rich doesn't make stepping over dead homeless people or drinking contaminated water any more pleasant.

No. I'm sorry but this is not the USSR. The Private sector is responsible for most of the advancements for society. Sure the government provides some infrastructure.. but it is up to the private sector and private contractors to build new infrastructure these days. I want the government to take less of a role in the economy, then you do.

Because tax cuts mean that less money is available for many worthwhile government programs, like public education. Public education trains the workers and entrepreneurs of the future so that we can build new industries.

Tax cuts do stimulate the economy somewhat, but they come at a price.

I'm not going to pretend that it's been proven that these tax cuts have already stimulated the economy yet, but your thesis is unfinished...

How much do you want to bet that the amount of money that the government collects during the tax season two years after a tax cut is actually more than the amount it collected the year before a tax cut?

If a tax cut goes from 18% to 17.5% but then, instead of having 100 people paying it they get 103 people paying it, they will make the same or more money at the lower percentage rate because more people are paying it. (18 x 100 = 1800 vs., 17.5 x 103 = 1802.5).

And this hasn't even counted the number of people that will make more money in their annual incomes so that they end up paying the same or more actual taxes individually (per family whatever) because even though they are at the lower percentage it is now a percentage of a higher number...


It's not so straight up one way or the other. If you don't increase tax payer base or increase individual incomes, then a tax cut hurts the government, but if it does, it boosts the economy and the government actually has MORE money for social issues, and less people needing help.

I'm not sure that's necessarily true, because the stimulated economy creates more jobs, etc., and produces more income to tax at a lower rate. The theory is that you come out ahead, tax wise.

There is some evidence to prove this, but I'll be man enough to admit I don't have the economic knowledge to back up my statement.
There's never been any real evidence outside the carpings of right-wing talk show hosts to backup the theories of supply-side economics. Yes--tax cuts can stimulate the economy in the short term, but they never pay for themselves on their own. They have to be made in concert with spending decreases, and even then, it's only a short-term solution.

By the way, notice the word "can" there. They don't always stimulate growth. There does come a point where they're no longer effective.

I'm not going to pretend that it's been proven that these tax cuts have already stimulated the economy yet, but your thesis is unfinished...

How much do you want to bet that the amount of money that the government collects during the tax season two years after a tax cut is actually more than the amount it collected the year before a tax cut?

If a tax cut goes from 18% to 17.5% but then, instead of having 100 people paying it they get 103 people paying it, they will make the same or more money at the lower percentage rate because more people are paying it. (18 x 100 = 1800 vs., 17.5 x 103 = 1802.5).

And this hasn't even counted the number of people that will make more money in their annual incomes so that they end up paying the same or more actual taxes individually (per family whatever) because even though they are at the lower percentage it is now a percentage of a higher number...


It's not so straight up one way or the other. If you don't increase tax payer base or increase individual incomes, then a tax cut hurts the government, but if it does, it boosts the economy and the government actually has MORE money for social issues, and less people needing help.
Which is debatable if it actually happens, once you strip away inflation and growth.

I suppose Dems have their reasons, but i'm not sure what they are to be exact. I'm not sure they know for sure either. Their usual response is that it benefits the wealthy, but they don't go into detail. I tihnk the main reason they don't like it is because they end up having less money to spend on pork projects and it shrinks government somewhat. But i'm just guessing as to why they're against it.

Actually, as the economy grows the tax revenues increase not decrease so the govt. has more money to spend.

What you're referring to is a laffer curve. The rub is, no one has ever proven it, nor has anyone ever found exactly where the peak is. We could be on either side of it. Some studies say that the laffer curve, rather then suggesting lower tax rates, actually suggests a tax rate of 80(!) percent.

Thanks for the explanation. But seriously, do you think you should be publishing that 80% figure in this forum? Someone from the government might read that and try to implement it... they're high enough right now for my taste.

I suppose Dems have their reasons, but i'm not sure what they are to be exact. I'm not sure they know for sure either. Their usual response is that it benefits the wealthy, but they don't go into detail. I tihnk the main reason they don't like it is because they end up having less money to spend on pork projects and it shrinks government somewhat. But i'm just guessing as to why they're against it.

I think maybe, you've been listening to Rush Limbagh too much. and FOX news.
Let me try and explain the theory.
If you give the middle and Lower classes money.. aka tax cuts and better jobs/wages. they Spend it. Maybe they waste it on booze and lottery tckets, maybe it's spent on a new car or air conditioner... but money gets MOVING again.
Whereas if you give tax breaks and benefits to the richer classes of citizens, the money dissapears. Either it's saved in banks, large homes.. or it goes into capital of a business... In order to produce more money for the company.. .which is again stored away like honey. Useless to anyone but the company itself and the CEOs. True that Salaried are paid.. but not a penny more than it takes to keep the workers showing up every day.

It's been a long time... but I don;t recall any net benefit I ever got from Reagan's "trickle down" Economics. If I was one of the CEOs I would have to admit I'd take a different stand on the issue. I may be a liberal... (yea.. I admit it. it's NOT a friggin dirty word..OK.. ) but I'm not an idiot. I care about what benefits ME first. If other people can also get thier pie, fine.
It IS a free country.... at least untill the corporations just go and BUY the whole Government outright and stop trying to hide behind thier puppet Senators and Cabinet members... many of which will retire to some major corporate 500 company... (hmmm... coincidence... NOT)

If you think I'm talkin out of my butt. .then fine.
Still a free country for now.
have a nice day..

Because tax cuts mean that less money is available for many worthwhile government programs, like public education. Public education trains the workers and entrepreneurs of the future so that we can build new industries.

Tax cuts do stimulate the economy somewhat, but they come at a price.

Not really. The government has spent a fortune on public education and things havent improved at all; in fact, the quality of US education has fallen over the past few decades fairly considerably. The key is not the amount of money, but spending the money you have wisely. Too much is blown on useless administrative staff, or simply wasted. We'd actually save money if 65% of the education budget went to teachers and schools, rather than the 60.2% we spend now. The benefits of this investment are also apparent, because paying teachers more and providing more equipment and infrastructure against a background of real accountability would do a lot to improve education.

Actually, as the economy grows the tax revenues increase not decrease so the govt. has more money to spend.
Prove. It.


Sheesh, I'll say the same thing again.


What everyone here is referring to is called a laffer curve. It's bell shaped. In the middle is a line, call it M. M is the greatest effective tax rate at which the government can get the most milk with the least moo. Increase the tax rate beyond M, and you get more moo, less milk (eg, you're squeezing too hard). Decrease the tax rate below M, and you get more moo, less milk (not enough squeezing). Traditional economics (eg, non-supply side) says that we sit on the 'not squeezing hard enough' side of the curve. Supply siders and others argue that we're on the right side of the curve, we're squeezing too hard. The problem is that no one knows for sure where M is, real tax reciepts tended to decline during the Reagan Tax Cut era, and studies suggest that the tax rate is too low, not too high.

If you give the middle and Lower classes money.. aka tax cuts and better jobs/wages. they Spend it. Maybe they waste it on booze and lottery tckets, maybe it's spent on a new car or air conditioner... but money gets MOVING again.

I see. So you're saying, the middle and lower classes don't now, or will ever, save or invest money? Interesting. False, but interesting.

I like the veiled implication that all lower class people are just bums looking for some cash to buy cheap wine. Nice job, but I would have expected that from the "other side."

Whereas if you give tax breaks and benefits to the richer classes of citizens, the money dissapears. Either it's saved in banks, large homes.. or it goes into capital of a business...

Hello, LSLG, "banks" and "capital" and "business" are not black holes that suck up money, never to be found again. It is as moving as any money moves. Money =/= cash.

In order to produce more money for the company.. .which is again stored away like honey. Useless to anyone but the company itself and the CEOs.

Stored away like honey? You're saying companies largely, or entirely, put their profits into vacuum pits? No, they reinvest that into the economy by making more products, employing more people, doing more business, expanding the business.

True that Salaried are paid.. but not a penny more than it takes to keep the workers showing up every day.

That's what a salary is for. You think shareholders give executives MORE than would be required for those executives to show up? Why would they do that - out of generosity and kindness? No, it's because a salary is that thing used to keep people working.

One thing, anyway.

There's never been any real evidence outside the carpings of right-wing talk show hosts to backup the theories of supply-side economics. Yes--tax cuts can stimulate the economy in the short term, but they never pay for themselves on their own. They have to be made in concert with spending decreases, and even then, it's only a short-term solution.

By the way, notice the word "can" there. They don't always stimulate growth. There does come a point where they're no longer effective.

The closest I can get to defending this is to say that it makes sense to me. I am aware that respectable economists can't agree on leading economic theories, so we're surely not going to be consulted.

Philosophically it makes sense to me to retain as much taxable income as possible. Of course there are many ways to skin that cat, from reforming government to decreasing spending and many things in between. Just speculating, but the economic truth, the perfect solution, may lie somewhere between the extremes of tax economics theories. Many things in life turn out that way.

Whereas if you give tax breaks and benefits to the richer classes of citizens, the money dissapears. Either it's saved in banks, large homes.. or it goes into capital of a business... In order to produce more money for the company.. .which is again stored away like honey. Useless to anyone but the company itself and the CEOs. True that Salaried are paid.. but not a penny more than it takes to keep the workers showing up every day.

You sound like you believe that money is stored away in a vault somewhere and never seen again. The money is placed in investments, it is borrowed by people to buy new homes and cars, it is borrowed by companies to expand production to make more things for people to buy, it is borrowed by new companies to make new products for people to buy. Yes, it makes some money for the rich, in the form of interest, dividends, and increased value of stock, but it most certainly doesn't disappear and most importantly it creates new jobs for people :eek:

I think maybe, you've been listening to Rush Limbagh too much. and FOX news.
Let me try and explain the theory.
If you give the middle and Lower classes money.. aka tax cuts and better jobs/wages. they Spend it. Maybe they waste it on booze and lottery tckets, maybe it's spent on a new car or air conditioner... but money gets MOVING again.
Whereas if you give tax breaks and benefits to the richer classes of citizens, the money dissapears. Either it's saved in banks, large homes.. or it goes into capital of a business... In order to produce more money for the company.. .which is again stored away like honey. Useless to anyone but the company itself and the CEOs. True that Salaried are paid.. but not a penny more than it takes to keep the workers showing up every day.

It's been a long time... but I don;t recall any net benefit I ever got from Reagan's "trickle down" Economics. If I was one of the CEOs I would have to admit I'd take a different stand on the issue. I may be a liberal... (yea.. I admit it. it's NOT a friggin dirty word..OK.. ) but I'm not an idiot. I care about what benefits ME first. If other people can also get thier pie, fine.
It IS a free country.... at least untill the corporations just go and BUY the whole Government outright and stop trying to hide behind thier puppet Senators and Cabinet members... many of which will retire to some major corporate 500 company... (hmmm... coincidence... NOT)

Giving tax cuts to the lower class does help, but many of them pay little or no tax to begin with and so the effect is minimal. The middle class does get tax cuts, as they did in 2001/2003 and in the early 90's with the Tax Act of 1993.

The wealthy buy many more things than the lower classes, and for more money. Expensive big-ticket items are purchased more, which results in a larger amount of money entering the economy. Middle class consumers get tax cuts, and they spend as well.

Business capital spending is buying things, but at larger volume. That drives a lot of the machinery and other manufacturing, and companies buy huge amounts of tech products as well. If the wealthy invest their taxes in business, that's great because it means more jobs and a stronger economy.

Companies pay their workers what they think they deserve; in a competitive economy this is totally dependent on the workers can do and how strong demand is. Comapnies pay you money to attract you to their company It's ridiculous and unreasonable to assume you deserve a certain amount just for being hired; if you don't like your salary, find another job that pays more and if there aren't any, that's what you deserve for your work.

Corporations hire tens of millions of workers and drive our economy. Most of them are responsible and follow the law, and treat their workers fairly. You use corporation as a boogeyman when in fact it's corporations that drive the economy and lead to constant improvements in our lives.

The Reagan era was a powerful era of strong growth. Inflation was tamed, job growth roared, unemployment plunged, and the stock market rallied. Corporate spending and hiring/investment drove a good amount of this. You use corporations as a boogeyman when in fact they do more good for us than harm. They're not altruistic, and their interests are paramount to them, just like yours are to you. To knock them for that is hypocritical.

i do not believe that there is ANYONE in our government, regardless of political affiliation, who ardently strives to give up their governmental power. just sayin.


Agreed, but that wasn't necessary what i meant.

Actually, as the economy grows the tax revenues increase not decrease so the govt. has more money to spend.


Exactly.


but we won't go into that

Exactly.


but we won't go into that
Oh, let's. Some proof of this would be nice.

lets talk about how many people are starving and being undermployed shall we?

Just because you are employed, it doesnt mean that the person has now made it. Many people are underemployed, the economy can be very good but it wouldnt benifit the lives of the people who belong to the working class. Giving them tax credits will also not help much since they dont receive alot of income and pay much taxes to begin with.

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027

Because they don't know jack about the economy? :D

I think maybe, you've been listening to Rush Limbagh too much. and FOX news.
Let me try and explain the theory.
If you give the middle and Lower classes money.. aka tax cuts and better jobs/wages. they Spend it. Maybe they waste it on booze and lottery tckets, maybe it's spent on a new car or air conditioner... but money gets MOVING again.
Whereas if you give tax breaks and benefits to the richer classes of citizens, the money dissapears. Either it's saved in banks, large homes.. or it goes into capital of a business... In order to produce more money for the company.. .which is again stored away like honey. Useless to anyone but the company itself and the CEOs. True that Salaried are paid.. but not a penny more than it takes to keep the workers showing up every day.

It's been a long time... but I don;t recall any net benefit I ever got from Reagan's "trickle down" Economics. If I was one of the CEOs I would have to admit I'd take a different stand on the issue. I may be a liberal... (yea.. I admit it. it's NOT a friggin dirty word..OK.. ) but I'm not an idiot. I care about what benefits ME first. If other people can also get thier pie, fine.
It IS a free country.... at least untill the corporations just go and BUY the whole Government outright and stop trying to hide behind thier puppet Senators and Cabinet members... many of which will retire to some major corporate 500 company... (hmmm... coincidence... NOT)

If you think I'm talkin out of my butt. .then fine.
Still a free country for now.
have a nice day..


The first word that comes to mind is "testy?" But it's no biggie.

You are absolutely entitled to your beliefs and opinions. I just don't happen to agree with them. And i'll have a nice day, but only if you do too :D

I see. So you're saying, the middle and lower classes don't now, or will ever, save or invest money? Interesting. False, but interesting.

Nitpick - The lower classes rarely save money as everything they earn their entire life is spent on surviving. The poorer end tend to earn (just) enough to feed, clothe and house themslves. Thi does not leave much to save or invest.

The middle classes can save but the major investments are in the property they live in (and pass on to their kids) and in retirement and college funds which get spent (strangely) during retirement and sending their kids to college.

The Wealthy save and invest their spare cash (of which they have lots) in whatever floats their boat and hence leave large estates for their children and ex-wives to fight over when they die.

Oh, let's. Some proof of this would be nice.

Do you mean the effects of economic growth on tax revenue?

Proving that economic growth increases tax revenue is easy. The 2005 deficit is now revised down to 333 billion from 427 billion due to stronger economic growth which increased government revenue.

For example, if the economy was originally 11,750,000,000,000 with 20% of it taken as tax, that would be 2,350,000,000,000 in revenue. If the economy grows 3.8% to 12.1965 trillion, that 20% is now 2,439,300,000,000 an increase of 89.3 billion.

Do you mean the effects of economic growth on tax revenue?

Proving that economic growth increases tax revenue is easy. The 2005 deficit is now revised down to 333 billion from 427 billion due to stronger economic growth which increased government revenue.

For example, if the economy was originally 11,750,000,000,000 with 20% of it taken as tax, that would be 2,350,000,000,000 in revenue. If the economy grows 3.8% to 12.1965 trillion, that 20% is now 2,439,300,000,000 an increase of 89.3 billion.
The fact that it spurs growth, and thus tax revenue. Proof, please. You've only proved that the economy grew, not that it grew because of tax cuts. More to the point, you've also been unable to prove that tax cuts cause an increase in tax revenue above and beyond that which would occur if the tax rate stayed the same. Basically, I'm asking you to please show me where on laffer's curve we are.

Do you mean the effects of economic growth on tax revenue?

Proving that economic growth increases tax revenue is easy. The 2005 deficit is now revised down to 333 billion from 427 billion due to stronger economic growth which increased government revenue.

For example, if the economy was originally 11,750,000,000,000 with 20% of it taken as tax, that would be 2,350,000,000,000 in revenue. If the economy grows 3.8% to 12.1965 trillion, that 20% is now 2,439,300,000,000 an increase of 89.3 billion.

Here here Vetalia but don't expect CSW to believe it. He's of the mind that lower taxes=less money in the government.

The fact that it spurs growth, and thus tax revenue. Proof, please.

I rest my case :rolleyes:

Oh, let's. Some proof of this would be nice.


Oh man. That would require gobs of typing past my normally innane attempt at wit which is usually about 5 to 10 sentences that look like a paragraph.
Sheesh :rolleyes:

i just can't muster that kind of energy... :p

The fact that it spurs growth, and thus tax revenue. Proof, please. You've only proved that the economy grew, not that it grew because of tax cuts. More to the point, you've also been unablem to prove that tax cuts cause an increase in tax revenue above and beyond that which would occur if the tax rate stayed the same. Basically, I'm asking you to please show me where on laffer's curve we are.

Oh, so you wanted proof that tax cuts equal increased growth; you can't decisively prove it, because you can't test what the economy would be like without the tax cuts. However, giving people more money does lead to either more spending or more saving; both can be good, albeit in different situations.

You can prove that high taxes do hurt the economy; look at the major European economies (France/Germany) for the effects of overtaxation. Companies are chased away and as a result the wages of workers are falling, with the result being a net decline in revenue as the economy loses ground to inflation.

However, even without tax cuts there would have been no surplus; the surplus projections used to justify tax cuts vaporized when the NASDAQ collapsed; we'd have to be at 20,000+ with continuous late 90's style growth to justify the projections.

Nitpick - The lower classes rarely save money as everything they earn their entire life is spent on surviving. The poorer end tend to earn (just) enough to feed, clothe and house themslves. Thi does not leave much to save or invest.

The middle classes can save but the major investments are in the property they live in (and pass on to their kids) and in retirement and college funds which get spent (strangely) during retirement and sending their kids to college.

The Wealthy save and invest their spare cash (of which they have lots) in whatever floats their boat and hence leave large estates for their children and ex-wives to fight over when they die.

Just because it's rare doesn't mean it's a rule. One reason a lot of people (regardless of 'class') in this country are mindless consumers is because they are taught to want and spend, and are not taught how to make better use of what resources they have.

Anyway. We're digressing here, or at least I am.

Here here Vetalia but don't expect CSW to believe it. He's of the mind that lower taxes=less money in the government.
Oh for the love of pete.


A hypothetical.


Total GTR (gross taxable revenue, for simplicities sake) of 100 dollars. Marginal tax rate of 30%, so the government gets 30$.

Year one, one half of the country, GTR of 50 dollars, cuts taxes to 15%, grows at 10%. End of year one GTR=55$, tax revenue is 8.25$

Year one, the other half of the country, GTR 50$, keeps taxes the same, grows at 10%, end of year one, GTR=55$, tax revenue is 16.5$

What to we learn? Simply stating growth without creating a difference in growth between the two says NOTHING. You need proof that tax cutting spurs an increase in growth above and beyond that of the nominal growth rate (and growth by other means) AND that of the cost of the tax cut.

Example, and proof of the above:
Same basic setup.
Country one: GTR of 50$, cuts taxes to 15%, has growth of 20%. End of year one, GTR of 60$. Tax revenue is 9.00$

Country two, same as before, tax revenue is 16.5$

Even though country two grew at half the rate of country one, country two still had more tax revenues because of the 50% tax cut that country one had.

The growth rate needed to break even in this case, by the way, is about..110ish%.

Oh, so you wanted proof that tax cuts equal increased growth; you can't decisively prove it, because you can't test what the economy would be like without the tax cuts. However, giving people more money does lead to either more spending or more saving; both can be good, albeit in different situations.

You can prove that high taxes do hurt the economy; look at the major European economies (France/Germany) for the effects of overtaxation. Companies are chased away and as a result the wages of workers are falling, with the result being a net decline in revenue as the economy loses ground to inflation.

However, even without tax cuts there would have been no surplus; the surplus projections used to justify tax cuts vaporized when the NASDAQ collapsed; we'd have to be at 20,000+ with continuous late 90's style growth to justify the projections.

Overregulation, not over taxation, is the problem of Germany and France. Two different things. Oddly enough, German companies, as a result of the regulation, have become some of the most productive and are poised to crack open the export market. Still not a good idea to overrregulate the labor market, though.

Tax cuts do stimulate the economy?

They can in the short term, but usually hurt it in the long run. Or so history has shown us.

Overregulation, not over taxation, is the problem of Germany and France. Two different things.

Overtaxation does hurt businesses in many ways, because those regulations are financed by taxes.

Extremely high fuel taxes make it expensive to transport goods within those countries, businesses must pay huge taxes for inefficent workers' healthcare and compensation costs, environmental taxes make it too expensive to establish factories, and on top of it their income is taxed, which slows hiring.

Anyway. We're digressing here, or at least I am.

I normally digress right around my second or third post. Come back in ten minutes and this thread will be WAY off track...


...what was the topic again? :eek:

They can in the short term, but usually hurt it in the long run. Or so history has shown us.

You have to be careful, because tax cuts can spur inflation if they are not properly managed or applied.

I keep reading the Keynsian theory of savings being applied here.

You have to be careful, because tax cuts can spur inflation if they are not properly managed or applied.

That's why I said they "can" ;)

You see, folks, the argument isn't really about the science of economics. It's about ideology. That's why there can be no reconciliation on this forum or in government on the correct management of the economy.

Economic proof, if it exists, doesn't matter. You see it here in this debate.

"Ideology immunises against reality and conscience. It tailors perceptions to order. It reassures adherents that their beliefs are right and their actions justified, even altruistic.

Dominant ideologies protect and promote particular interests. The nearer an ideology comes to being the ruling political correctness, the more strongly-placed the interests behind it are likely to be.

Advocates of economic orthodoxy claim their theories are dominant because they comprise state-of-the-art objective knowledge of how the economy works. The scientific status of economic theories, however, is problematic. Economic orthodoxies are never independent of ideology and politics. When adopted politically to frame and justify public policy, orthodoxies reflect the distribution of power. Sometimes the dominant power and its interests are those of the democratic majority, sometimes those of a privileged minority.

Boittom line, whoever gets in power is going to try and do things their way. Better stick to voting who you think furthers your self-interest. For me, that is largely paying less taxes.

EDIT: here's the link http://www.sprint.net.au/~rwb/ideology.htm

I keep reading the Keynsian theory of savings being applied here.

It works; one of the things hurting Japan's economy is that too much money is being saved and not enough is being spent to drive the economy. They have a high personal savings rate, which crimps consumer spending.

Overtaxation does hurt businesses in many ways, because those regulations are financed by taxes.

Extremely high fuel taxes make it expensive to transport goods within those countries, businesses must pay huge taxes for inefficent workers' healthcare and compensation costs, environmental taxes make it too expensive to establish factories, and on top of it their income is taxed, which slows hiring.
But it's more the problems that they have with expanding/contracting to meet demand/cut costs that is creating problems with their workforces. French companies, for example, are loathing to expand to meet demand (thus keeping unemployment high) because of the labor costs and the inability to fire those workers when times get rough (often leading to the collapse of the parent company itself, creating a gigantic and much worse mess). I agree though, high rates do tend to restrict growth, the question is how high. I don't advocate raising taxes, I don't want them any higher them, but cutting them willy nilly and claiming that they raise revenue when there is no evidence for this happening is anathma to me.

But it's more the problems that they have with expanding/contracting to meet demand/cut costs that is creating problems with their workforces. French companies, for example, are loathing to expand to meet demand (thus keeping unemployment high) because of the labor costs and the inability to fire those workers when times get rough (often leading to the collapse of the parent company itself, creating a gigantic and much worse mess). I agree though, high rates do tend to restrict growth, the question is how high. I don't advocate raising taxes, I don't want them any higher them, but cutting them willy nilly and claiming that they raise revenue when there is no evidence for this happening is anathma to me.

It's that combination of factors that hurts them, as you state and I agree with.

Generally, the best way of managing taxes is to set certain limits. For example, put parameters on the size of deficits/surpluses as a percent of GDP
and proceed to cut or raise taxes when they exceed them; usually, 2.5 to 3% is a good range. That will also keep spending in check while still allowing room to cover inflation and economic slowdowns; the goal should be a balanced budget rather than a surplus or deficit.

Tax cuts can actually attract more revenue for the government and that means more money for government programs. Afterall government programs are useless if the economy is tanking (Argentina).
This is true and it has been proven lately in Tanzania. But the problem is that to cut taxes you have to cut essential government programmes, some of which, such as public transport and education, also stimulate the economy.

Because tax cuts mean that less money is available for many worthwhile government programs, like public education. Public education trains the workers and entrepreneurs of the future so that we can build new industries.

Tax cuts do stimulate the economy somewhat, but they come at a price.
I agree.

It works; one of the things hurting Japan's economy is that too much money is being saved and not enough is being spent to drive the economy. They have a high personal savings rate, which crimps consumer spending.
Aye, that is true.
Taxation is just as crippling to the economy as a deficit, the less taxation, the more money in the pockets of the consumer. There seems to be the idea that the lower percentage of ownders cannot or will not save.
Business regulation creates a harmful and quite expensive environment for business, the best way to better an economy, in my opinion, is to leave it to its own devices. [/rant]

You have to be careful, because tax cuts can spur inflation if they are not properly managed or applied.
I would like to use an analogy that Friedman once used, if there is a drought the people will save what they can, if there is plenty of water the people will be more liberal with it. Moderation is the key.

This is true and it has been proven lately in Tanzania. But the problem is that to cut taxes you have to cut essential government programmes, some of which, such as public transport and education, also stimulate the economy.

Not necessarily; all you have to do is:

1. Improve efficency (the 65% rule for schools, cutting pork like ethanol subsidies, cutting administrative staff)
2. Halt spending, or preferrably chain it to inflation

Those aren't even necessary if you can afford to borrow the money; if the deficit is smaller than the rate of economic growth, the net value of the debt is effectively repaid. However, if it's bigger, you will have to do those two steps or cut taxes less or not at all.

Thanks for the explanation. But seriously, do you think you should be publishing that 80% figure in this forum? Someone from the government might read that and try to implement it... they're high enough right now for my taste.
Not at all. Americans pay rather low taxes; too low for the amount of spending your government is doing.

Nitpick - The lower classes rarely save money as everything they earn their entire life is spent on surviving. The poorer end tend to earn (just) enough to feed, clothe and house themslves. Thi does not leave much to save or invest.

The middle classes can save but the major investments are in the property they live in (and pass on to their kids) and in retirement and college funds which get spent (strangely) during retirement and sending their kids to college.

The Wealthy save and invest their spare cash (of which they have lots) in whatever floats their boat and hence leave large estates for their children and ex-wives to fight over when they die.

Help us out a little here. Please define the following; lower class; middle class; wealthy.

The fact that it spurs growth, and thus tax revenue. Proof, please. You've only proved that the economy grew, not that it grew because of tax cuts. More to the point, you've also been unable to prove that tax cuts cause an increase in tax revenue above and beyond that which would occur if the tax rate stayed the same. Basically, I'm asking you to please show me where on laffer's curve we are.

OK, if the tax cuts did not stimulate the economy, what in your opinion did?

Just because it's rare doesn't mean it's a rule. One reason a lot of people (regardless of 'class') in this country are mindless consumers is because they are taught to want and spend, and are not taught how to make better use of what resources they have.

Sad but true.

I think maybe, you've been listening to Rush Limbagh too much. and FOX news.
Let me try and explain the theory.
If you give the middle and Lower classes money.. aka tax cuts and better jobs/wages. they Spend it. Maybe they waste it on booze and lottery tckets, maybe it's spent on a new car or air conditioner... but money gets MOVING again.
Whereas if you give tax breaks and benefits to the richer classes of citizens, the money dissapears. Either it's saved in banks, large homes.. or it goes into capital of a business... In order to produce more money for the company.. .which is again stored away like honey. Useless to anyone but the company itself and the CEOs. True that Salaried are paid.. but not a penny more than it takes to keep the workers showing up every day.

It's been a long time... but I don;t recall any net benefit I ever got from Reagan's "trickle down" Economics. If I was one of the CEOs I would have to admit I'd take a different stand on the issue. I may be a liberal... (yea.. I admit it. it's NOT a friggin dirty word..OK.. ) but I'm not an idiot. I care about what benefits ME first. If other people can also get thier pie, fine.
It IS a free country.... at least untill the corporations just go and BUY the whole Government outright and stop trying to hide behind thier puppet Senators and Cabinet members... many of which will retire to some major corporate 500 company... (hmmm... coincidence... NOT)

If you think I'm talkin out of my butt. .then fine.
Still a free country for now.
have a nice day..


If the companies keep that extra money, then they expand operations and hire more people, or they buy more infrastructure, which helps other companies who hire people, or they give their CEO a raise, and he buys more stuff with it. If you buy a big house, the real estate agent gets a commission, and he buys stuff with it. If there is more money in the bank, then interest rates go down.

I'm not saying this is necessarily the best or only way to go, but it does stand to reason that it helps the economy.

They can in the short term, but usually hurt it in the long run. Or so history has shown us.

Is that because the democrats get in power while the economy is good and tax us back into a poor economy? Under Reagan/Bush, the economy turned around and was doing well. Along come the dems and Clinton, they ride the wave, tell us how "they turned things around" and increased taxes. Along comes a Republican Congress who puts the stop to the tax and spend Democratic theory. Economy still doing OK then wham bam 9/11. Economy tubes, dems blame Bush and Republicans not 9/11. Then Bush and the Republicans pass a tax cut the dems scream will ruin us. The tax cuts work. 2006 elections should be very interesting.

...what was the topic again? :eek:

How Bush has ruined the economy. :D :D

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027

Tax cuts CAN stimulate the economy in certain circumstances if done intelligently. However, I am not sure how the article you cite proves this. If anything, most US economic growth during the Bush administration is probably attributable to the decline in the US dollar against just about every global currency. So your relative standard of living has taken a hit, for some rather unspectacular economic growth. A bit of a Pyhhric victory.

Tax cuts works to a point because taxpayers spend their money more effectively than the government to a point. Bush's tax cuts were not intelligent because they overwhelmingly benefited a small number of wealthy people. This would result in little incentive for productivity gain for the majority of the workforce (i.e. the middle class). These people are also more likely than the government to spend their money abroad, so some of the trickle down is lost. An example is when British Columbia cut its taxes predominantly in the top brackets, it benefited Ontario's economy more than BC's, because the beneficiaries of the tax cuts spent them on luxury goods (e.g. cars) manufactured in Ontario.

Is that because the democrats get in power while the economy is good and tax us back into a poor economy? Under Reagan/Bush, the economy turned around and was doing well. Along come the dems and Clinton, they ride the wave, tell us how "they turned things around" and increased taxes. Along comes a Republican Congress who puts the stop to the tax and spend Democratic theory. Economy still doing OK then wham bam 9/11. Economy tubes, dems blame Bush and Republicans not 9/11. Then Bush and the Republicans pass a tax cut the dems scream will ruin us. The tax cuts work. 2006 elections should be very interesting.

You forgot to mention the rosy economy during the Carter years.

Bush's tax cuts were not intelligent because they overwhelmingly benefited a small number of wealthy people.

An across the board tax cut of X% is fair and equitable for all. Yes, those that make more $ will get more $ back, but everyone gets the same %. The government is not and should not be in the business of redistributing individual wealth.

In the Middle Ages, Europe's economy was stimulated greatly by The Plague. Why is it that Democrats are so much against "The Black Death"???

In the Middle Ages, Europe's economy was stimulated greatly by The Plague. Why is it that Democrats are so much against "The Black Death"???
Because it's out of fashion.

Meh, I don't believe in tax cuts as viable policy.

Less taxes is part of the Republican's ideological basis, and the justification for it comes afterwards. The economic justification of it is usually the "Laffer Curve (http://en.wikipedia.org/wiki/Laffer_curve)", but since empirical evidence has apparently shown the "ideal" tax rate to be aound 80%, most economists have dropped that construct.

Politicians enjoy it though.

Just a couple of points:

Tax cuts stimulate the economy.
True, but government spending stimulates it more so. Also don't just assume that stimulation is an entirely good thing.
Monetary policy, however is the real tool for stimulating and slowing the economy. Fiscal policy (taxes and spending) should be considered as simply a means to funding the government program.

Tax cuts increase government revenue.
Depends. If taxes are 'killers' then definitely yes. Normally however tax cuts decrease revenue. Take different examples, sometimes you get a yes answer, other times a no. It depends on the nature of the cut, and the situtation the cut is being applied in.

9/11 caused the Bush recession.
False. 9/11 made a situation worse that was already there.


I personally feel Bush's tax cuts have been reckless. I tend to be a economic rationalist, but I disagree with the nature of Bush's tax cuts. I do believe in equal tax rates for all incomes but Bush doesn't seem to be striving for this. I believe is balanced or surplus budgets; but these seem long dead.

9/11 caused the Bush recession.
False. 9/11 made a situation worse that was already there.[/rant]

It was not the Bush recession. Bush had been in office only nine months. 9/11 made the Clinton recession worse.

It was not the Bush recession. Bush had been in office only nine months. 9/11 made the Clinton recession worse.

The Bush recession caused 9/11.

snip...I do believe in equal tax rates for all incomes but Bush doesn't seem to be striving for this. I believe is balanced or surplus budgets; but these seem long dead.[/rant]

So, what do you consider an "equal" tax rate? What percent of income should everyone pay? Oh, and to make it equal, don't we need to do away with tax credits?

The Bush recession caused 9/11.

Wrong Gartref. The recession started in late 2000 while Bill Clinton was in office.

The Bush recession caused 9/11.

:confused:

Wrong Gartref. The recession started in late 2000 while Bill Clinton was in office.

I was talking about Bush the First.

I was talking about Bush the First.

Actually the economy started to grow near the end of his term.

Actually the economy started to grow near the end of his term.

But the damage then had already been done.

But the damage then had already been done.

What damage are you talking about?

What damage are you talking about?

Dammit! Give me a minute to think. I'm making all this up as I go along.

Just a couple of points:

Tax cuts stimulate the economy.
True, but government spending stimulates it more so. Also don't just assume that stimulation is an entirely good thing.
Monetary policy, however is the real tool for stimulating and slowing the economy. Fiscal policy (taxes and spending) should be considered as simply a means to funding the government program.

Tax cuts increase government revenue.
Depends. If taxes are 'killers' then definitely yes. Normally however tax cuts decrease revenue. Take different examples, sometimes you get a yes answer, other times a no. It depends on the nature of the cut, and the situtation the cut is being applied in.

9/11 caused the Bush recession.
False. 9/11 made a situation worse that was already there.


I personally feel Bush's tax cuts have been reckless. I tend to be a economic rationalist, but I disagree with the nature of Bush's tax cuts. I do believe in equal tax rates for all incomes but Bush doesn't seem to be striving for this. I believe is balanced or surplus budgets; but these seem long dead.

Government spending does not stimulate the economy more; FDR spent a fortune in government work projects and nothing happened. World War 2 finally ended the Depression with its massive increase in demand for goods and services.

Monetary policy controls inflation and can stimulate the economy, that is correct. The 2001 recession was due considerably to the overtightening by the Federal Reserve in May 2000 after the NASDAQ bubble burst; the deathblow came from the Microsoft antitrust case which more or less collapsed the market, from the 4400 range down to 2500 by year's end.

Tax cuts decrease revenue, but the idea is that they will increase growth which will result in revenue gains in the long run. However, they can also stoke inflation which counterbalances their effect in some cases.

The "Bush Recession" is a lie; the economy was already faltering as early as mid 2000, when the average monthly job creation fell from 269,200 to 83,000. Industrial production started declining in October 2000, manufacturing hours plunged, and earnings topped. Bush inherited a declining economy that was exacerbated by the 9/11 attacks; around 1 million private sector jobs were lost due to that attack.

I'm not sure that's necessarily true, because the stimulated economy creates more jobs, etc., and produces more income to tax at a lower rate. The theory is that you come out ahead, tax wise.

There is some evidence to prove this, but I'll be man enough to admit I don't have the economic knowledge to back up my statement.

I know of one specific incident in American history where Warren Harding cut taxes be 66% and nearly doubled his revenue.

Dammit! Give me a minute to think. I'm making all this up as I go along.

That's precisely what I thought. Thanks for confirming it.

The "Bush Recession" is a lie; the economy was already faltering as early as mid 2000, when the average monthly job creation fell from 269,200 to 83,000. Industrial production started declining in October 2000, manufacturing hours plunged, and earnings topped. Bush inherited a declining economy that was exacerbated by the 9/11 attacks; around 1 million private sector jobs were lost due to that attack.

Don't forget the corporate scandles that hit too. Even more jobs were lost during that time as well and it didn't help matters much.

Tax cuts decrease revenue, but the idea is that they will increase growth which will result in revenue gains in the long run. However, they can also stoke inflation which counterbalances their effect in some cases.
And according to that theory, the optimal tax rate would be 80%. That's what the empirical evidence says.

"At least one empirical study, looking at actual historical data on tax rates, GDP, and revenue, placed the 'optimal' tax rate (the point at which another marginal tax rate increase would decrease tax revenue) as high as 80%. Paul Samuelson argues in his popular economic textbook that Ronald Reagan was correct in a very limited sense to view the intuition underlying the Laffer curve as accurate, because as a successful actor, Reagan was subject to marginal tax rates as high as 90% during World War II. The point is that in a progressive tax system, any given person's perspective on the validity of the Laffer curve will be influenced by the marginal tax rate to which that person's income is subject."

Don't forget the corporate scandles that hit too. Even more jobs were lost during that time as well and it didn't help matters much.

The stock market also bottomed in 2002, which erased even more wealth and hit consumer spending; I remember the talk of a "double dip" recession, but those fears were averted, in my opinion, by the 2003 tax cuts.

LOL - I love watching people argue about Presidential effects on the economy. It makes as much sense as arguing about what day of the week has better sunsets.

LOL - I love watching people argue about Presidential effects on the economy. It makes as much sense as arguing about what day of the week has better sunsets.
Not presidential, but political.

The stock market also bottomed in 2002, which erased even more wealth and hit consumer spending; I remember the talk of a "double dip" recession, but those fears were averted, in my opinion, by the 2003 tax cuts.

I agree that those tax cuts probably helped and not just the 2003 ones but the ones he passed when he first took office too.

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027


Because they are not guaranteed to stimulate the economy. The "suply-side economics" argument starts from the false assumption that businesses are ethical, and actually give a crap about anything but money.

They will not necessarily do anything but line their pockets with the tax cut, doing absolutely nothing in the area of hiring more workers, or sharing the wealth by giving their workers a well-deserved pay increase.

See, for it to stimulate the economy, it needs to find it's way down the economic food chain. You assume businesses and rich folks are ethical, and will do these things. We know better.

I say, you want a tax cut? Fine. Create jobs FIRST...THEN you get your tax cut. And you get a tax cut that is based on the quality of the jobs you create. You don't get much of a tax cut if all you do is create McJobs that don't pay a living wage.

Do the decent, honest and right thing FIRST...then be rewarded. We no longer TRUST businesses to do thr right thing AFTER they have already pocketed the money, because too many of them have proved that they won't.

I agree that those tax cuts probably helped and not just the 2003 ones but the ones he passed when he first took office too.

They took out the first recession, while the 2003 cuts primed us for 2004's record growth and 2005's above trend growth. We're in a solid economic situation, and if oil prices cool the economy will take off even more.

They took out the first recession, while the 2003 cuts primed us for 2004's record growth and 2005's above trend growth. We're in a solid economic situation, and if oil prices cool the economy will take off even more.

And the job numbers are starting to point to that effect! And if the economy wasn't doing great the interest rates wouldn't be going up. Another indicator that the economy is booming.

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027
And I suppose that you believe all this stuff and it gives you a fuzzy feel good feeling?

Perhaps you should take the "good news" with a grain of salt?

Hidden Unemployment (http://zmagsite.zmag.org/Feb2004/duboff0204.html)

The official unemployment rate (which was 4.3 percent in March 2001) peaked at 6.4 percent in June 2003, then fell to 5.9 percent in November 2003, essentially unchanged from October. Thereby hangs the tale of the labor market facing U.S. workers—provided that the full story is told.

The official rate is the percentage of all workers who are unemployed, expressed as unemploy- ment/labor force. The numerator, unemployment, is the number of jobless people who have actively looked for work during the last four weeks. The denominator is the number of people in the labor force, which equals employment plus unemployment, or people who have jobs plus those who are unemployed as defined in the numerator.

This measure understates unemployment in two key respects. First, unemployment excludes involuntary part-timers—people who want full-time work but have to settle for part-time or split-week schedules. Second, it excludes “discouraged workers”—those who believe they can no longer find work and stop looking or who indicate they want a job and have looked for work sometime in the indefinite recent past. People in this category are no longer actively seeking work and are therefore classified as “not in the labor force” (neither employed nor unemployed).

Thus, as happened last summer, an increase in numbers of discouraged workers can actually reduce the official unemployment rate. The labor force as officially defined (employed plus unemployed) totaled 147,096,000 in June and 146,530,000 in August—a decrease of 566,000, during which time the official unemployment rate fell from 6.4 to 6.1 percent. The reason for the drop is that 566,000 workers vanished (ceased looking for work and were no longer considered to be in the labor force).

For this and other reasons, the U.S. Bureau of Labor Statistics (BLS) provides a series of “alternative unemployment measures,” which go almost entirely ignored and unreported by the major media and news organizations. One of the alternative measures shows that if both involuntary part-timers and discouraged workers were added to the unemployment rate as officially measured, the rate for November 2003 would stand at 9.5 percent of the labor force, instead of the official 5.9 percent.

Also from 2004:

February Job Growth Surprisingly Weak (http://www.hireamericancitizens.org/jobgrowth022004.html)
Updated 9:13 AM ET March 5, 2004

Over the last three months, employment has risen an average of just 42,000 per month, down from the 79,000 average of the prior three months and far short of the 150,000 or so jobs needed each month just to keep pace with growth in the labor force.

Apparently, the economy should grow by 1,800,000 jobs per year WITHOUT any stimulus.

Do the math people!!

And the job numbers are starting to point to that effect! And if the economy wasn't doing great the interest rates wouldn't be going up. Another indicator that the economy is booming.

We'll see excellent growth in the third quarter; over 2.3% of GDP growth was lost due to inventories, and that will be rebuilt in the third quarter, so a read of 4 to 4.5% is entirely possible if not higher than that.

We'll see excellent growth in the third quarter; over 2.3% of GDP growth was lost due to inventories, and that will be rebuilt in the third quarter, so a read of 4 to 4.5% is entirely possible if not higher than that.

Better than I thought it was going to be.

My, My,
It's good to see that my post has generated such energetic responses.

Very good... Your hate has made you powerfull. NOW... Take your jedi weapon, use your hatred to strike me down and your journey to the dark side will be complete.
With each passing moment you make yourself more my servant.

OK.. enough of that star wars crap.
Tax Cuts... right? ok... See my point was.. that poor people spend more money. Whereas Companies' income becomes tied up in capital. It doesn't FLOW as quickly or easily. and I still don't see anything to contradict that in any of your excuses.

Of course we need Both sides of the economy. But tax cuts for corporations? To stimulate growth?? Bullocks! They can pay accountants to find tax loopholes. But the "working" classes pay a greater amount in taxes, simply because there are many more of them.
ANd in a capitalistic Democracy, that should mean greater representation in the government. But it doesn't.. does it?
Because..... Politicians are corrupt. All of them.. and that goes for that fool Ted Kennedy too. It's all a matter of who's friends get the tax breaks after which Party wins the white house.
OK, Chew on that, my pretties...
and remember... if you can't attack the message.. just keep attacking the messenger. There's a good little Dittohead. Tell me more BS that you learned from some radio show.
Oh.. and have a nice day. ;) :mp5:

And the job numbers are starting to point to that effect! And if the economy wasn't doing great the interest rates wouldn't be going up. Another indicator that the economy is booming.
Interest rates are starting to go back down again in some parts of the world, I think the BoE just cut (their manufactoring is in recession again). The reason why our rates are still going up is because the Fed is trying to keep a handle on housing prices, that and they want enough room to cut and cut aggressively when this wave turns south, which it might if Britian/Australia are bellweathers.

Not presidential, but political.


If so then they wouldn't be discussind administrations. Regardless- congress has about as much to do with the economy as a spark plug does on making a car go fast. - It's part of the process - but not the most important part by far.

Interest rates are starting to go back down again in some parts of the world, I think the BoE just cut (their manufactoring is in recession again). The reason why our rates are still going up is because the Fed is trying to keep a handle on housing prices, that and they want enough room to cut and cut aggressively when this wave turns south, which it might if Britian/Australia are bellweathers.

Speaking of the housing market. Rumor on the vine has it that we are in for another housing boom! :D Economy is going up and up and up. The Economy is BOOMING and is running on all cylinders.

I agree that those tax cuts probably helped and not just the 2003 ones but the ones he passed when he first took office too.
Since Bush the Younger took office, the share of the National Debt for every man, woman and child has increased from $19,000 to $26,589.

Enjoy!!

-snipped-

A lot of that data is old. The past few months have seen steady uptrends in employment-population ratio, participation rate, and declining long term unemployment. Even the "true" unemployment (which is not particularly useful because it includes people who aren't actively looking for a job but "want" one) has fallen from 9.8 to 8.9, in line with the headline rate. That means the growth isn't from workers leaving the labor force but rather finding jobs; this implies that hiring is even stronger than reported.

Hourly earnings growth is accelerating, with the strongest growth in over a year and comparable to the 90's gains. Gains are occuring accross the board, and high paying technology manufacturing is growing rapidly, adding 3,200 jobs in July. IT job growth is recovering, and higher-paying job growth outpaces slower paying.

The monthly average job growth in 2004 was 186,000 and is currently running at 191,000 per month for 2005. That means 4,254,000 jobs will be created in 2004 and 2005 combined, with corresponding gains in earnings. The economy's on some of its best footing in a long time.

Government spending does not stimulate the economy more; FDR spent a fortune in government work projects and nothing happened. World War 2 finally ended the Depression with its massive increase in demand for goods and services.
The government spending didn't end the Depression because the downward pressure outweighed the government spending; essentially it reduced the effect of the depression; but this was an era when pump priming wasn't taken to well, so one couldn't run large scale spending programs, unless there was a war. Large scale spending eventually came; albeit on war goods. Citing WW2 rather proves my point; spending stimulates.

Tax cuts decrease revenue, but the idea is that they will increase growth which will result in revenue gains in the long run.
I am well aware of the theory; although I don't think the emphasis on the long run is particularly useful, the medium run is probably better cited. But the 'idea' is far too simple; as you need to weigh up just how much increase in the tax base their will be against the size of the tax cuts. The emphasis should be placed on restructuring the tax system rather than cutting taxes. Unless taxes are very crippling; I believe taxes don't affect long run growth (even though I am part of the low tax movement).

The "Bush Recession" is a lie; the economy was already faltering as early as mid 2000, when the average monthly job creation fell from 269,200 to 83,000. Industrial production started declining in October 2000, manufacturing hours plunged, and earnings topped. Bush inherited a declining economy that was exacerbated by the 9/11 attacks; around 1 million private sector jobs were lost due to that attack.
I was just looking for something to call it; and "The Clinton Recession" seems a rather silly thing to call it. The statistics you cite aren't ones I would use to substantiate an arguement; try quarterly GDP/GNP figures, much more persuasive/informative. I personally think the greatest fault lies with the Fed, and continued failure by all sides to reform it into a modern central bank.

Speaking of the housing market. Rumor on the vine has it that we are in for another housing boom! :D Economy is going up and up and up. The Economy is BOOMING and is running on all cylinders.
Yeah and you are about to blow a rod, and you will soon need a valve job, and perhaps an engine rebuild.

A lot of that data is old. The past few months have seen steady uptrends in employment-population ratio, participation rate, and declining long term unemployment. Even the "true" unemployment (which is not particularly useful because it includes people who aren't actively looking for a job but "want" one) has fallen from 9.8 to 8.9, in line with the headline rate. That means the growth isn't from workers leaving the labor force but rather finding jobs; this implies that hiring is even stronger than reported.

Hourly earnings growth is accelerating, with the strongest growth in over a year and comparable to the 90's gains. Gains are occuring accross the board, and high paying technology manufacturing is growing rapidly, adding 3,200 jobs in July. IT job growth is recovering, and higher-paying job growth outpaces slower paying.

The monthly average job growth in 2004 was 186,000 and is currently running at 191,000 per month for 2005. That means 4,254,000 jobs will be created in 2004 and 2005 combined, with corresponding gains in earnings. The economy's on some of its best footing in a long time.

To borrow a favorite phrase of another poster

OH BURN!!!!!

Since Bush the Younger took office, the share of the National Debt for every man, woman and child has increased from $19,000 to $26,589.

Enjoy!!

Actually, the deficit is growing slower than the economy, so the amount as a percent of GDP is declining. The numbers don't matter when our per capita income is growing faster than the debt.

Yeah and you are about to blow a rod, and you will soon need a valve job, and perhaps an engine rebuild.

I doubt we'll be blowing a rod anytime soon. If we were going to blow a rod, it probably would've blown by now but instead, the growth is accelerating steadily and not all at once and that's a good thing!

I'd be worried if it was a dramatic increase but it isn't. Its a steady increase!

Mmm. let me clarify, the ones who have the view of, "oh..tax cuts timulate the economy"...is just as bad as the Japanese government spending their way out of recessions. Maybe we should focus on public education and health and social welfare rather than funding a structurally oppressive bastion
What to do to stimulate the economy once tax rates are lowered to the point they only cover government wages, you Friedrich August von Hayek tryhards. then I suppose you'll ban unionism or wind up any collective bargaining so americans are on poorer wages than Chinese people, because let's face it, if the average labourer in the States worked for 1 cent aday, that would create more jobs...Shut the help up with your conservative misguided pseudo-Keynesian machinations.


David

Mmm. let me clarify, the ones who have the view of, "oh..tax cuts timulate the economy"...is just as bad as the Japanese government spending their way out of recessions. Maybe we should focus on public education and health and social welfare rather than funding a structurally oppressive bastion
What to do to stimulate the economy once tax rates are lowered to the point they only cover government wages, you Friedrich August von Hayek tryhards. then I suppose you'll ban unionism or wind up any collective bargaining so americans are on poorer wages than Chinese people, because let's face it, if the average labourer in the States worked for 1 cent aday, that would create more jobs...Shut the help up with your conservative misguided pseudo-Keynesian machinations.


David
Your flames are so warm.

I doubt we'll be blowing a rod anytime soon. If we were going to blow a rod, it probably would've blown by now but instead, the growth is accelerating steadily and not all at once and that's a good thing!

I'd be worried if it was a dramatic increase but it isn't. Its a steady increase!
It's blown in Australia, is blowing in Britain and is collapsing in many places around the world. Housing prices are going to be a big problem when they come down, which they will (they're absolutely insane and have no connection in reality, much as the old tech bubble), because almost all of our growth is financed by spending, spending that is fueled by home loans and such.

So, what do you consider an "equal" tax rate? What percent of income should everyone pay? Oh, and to make it equal, don't we need to do away with tax credits?

Equal effective marginal tax rates for all people and corporations. Even better would be a flat goods and services tax, on all goods and services. Immense taxation simplification and no need for all the stuff like tax returns, frankings or credits (albeit I'm not a tax lawyer or accountant, so don't crucify me if I have spoken any inaccuracy).

The government spending didn't end the Depression because the downward pressure outweighed the government spending; essentially it reduced the effect of the depression; but this was an era when pump priming wasn't taken to well, so one couldn't run large scale spending programs, unless there was a war. Large scale spending eventually came; albeit on war goods. Citing WW2 rather proves my point; spending stimulates.

There were multiple factors involved that no amount of government spending in the world could fix. There are some examples of government spending helping considerably (like the defense dept. spending during the Cold War), but it can also backfire and cause inflation.


I was just looking for something to call it; and "The Clinton Recession" seems a rather silly thing to call it. The statistics you cite aren't ones I would use to substantiate an arguement; try quarterly GDP/GNP figures, much more persuasive/informative. I personally think the greatest fault lies with the Fed, and continued failure by all sides to reform it into a modern central bank.

It wasn't Clinton's fault at all, but rather a poor decision on the Fed's part. They failed twice:

The first was at the December 14th 1999 FOMC meeting. There were fears of Y2K, and the Fed decided not to raise rates; that provided the push for the NASDAQ to reach 4000, and then 5000. Had they raised rates, the bubble might have been averted and a soft landing engineered.

The second time was in May 2000, when they overreacted and raised the funds rate when they should have either done nothing or at most raised it 25 bps. The problem was that they were obsessed with looking for inflation where it didn't exist.

It's blown in Australia, is blowing in Britain and is collapsing in many places around the world.

Hasn't blown here. I love how you try to equate what happens in Australia and Britain will happen here. Are we connected? Yes but that doesn't mean we'll be fully affected by what happens in those 2 nations. As for the rest of the world, it hasn't fully affect us either. The Housing market is BOOMING as is the Job market and so far it is showing no signs of slowing down.

Housing prices are going to be a big problem when they come down, which they will (they're absolutely insane and have no connection in reality, much as the old tech bubble), because almost all of our growth is financed by spending, spending that is fueled by home loans and such.

And yet we just had a massive fight over property values here in the area in which I live. Part of that property fight was the value of the homes.

Actually, the deficit is growing slower than the economy, so the amount as a percent of GDP is declining. The numbers don't matter when our per capita income is growing faster than the debt.

The size at which the deficit is growing in relation to GDP and the rate at which debt is growing relative to GDP are two different concepts.

Just because GDP is growing faster than the deficit, doesn't mean GDP is growing faster than national government debt. I don't know what the numbers are, you may be right; but your logic is false.

A lot of that data is old. The past few months have seen steady uptrends in employment-population ratio, participation rate, and declining long term unemployment. Even the "true" unemployment (which is not particularly useful because it includes people who aren't actively looking for a job but "want" one) has fallen from 9.8 to 8.9, in line with the headline rate. That means the growth isn't from workers leaving the labor force but rather finding jobs; this implies that hiring is even stronger than reported.

Hourly earnings growth is accelerating, with the strongest growth in over a year and comparable to the 90's gains. Gains are occuring accross the board, and high paying technology manufacturing is growing rapidly, adding 3,200 jobs in July. IT job growth is recovering, and higher-paying job growth outpaces slower paying.

The monthly average job growth in 2004 was 186,000 and is currently running at 191,000 per month for 2005. That means 4,254,000 jobs will be created in 2004 and 2005 combined, with corresponding gains in earnings. The economy's on some of its best footing in a long time.
However, the fact remains that Americans are maxing out their credit options while the interest rates are low. This becomes a huge liability when interest rates start to rise.

And apparently US bankruptcy laws will be changing in the fall. The changes will saddle debtors in that they won't be able to divest themselves of their debt, they will just get an extension on debt repayment.

Bankruptcy filings rise as change in laws nears (http://www.usatoday.com/money/perfi/general/2005-07-26-bankrupt-usat_x.htm?POE=MONISVA)

The number of bankruptcy filings surged 12% in April, May and June from the same period last year, according to exclusive numbers from research firm LexisNexis. That's quite a rise, considering filings were down 2.6% during the first three months of the year, LexisNexis says.

Consumers teetering on the edge are taking the bankruptcy plunge now because the new law attempts to curb the use of Chapter 7 bankruptcies and steer people into Chapter 13 proceedings. There's a big difference: Chapter 7 forgives most debts, while Chapter 13 only extends the amount of time to pay.

Mmm. let me clarify, the ones who have the view of, "oh..tax cuts timulate the economy"...is just as bad as the Japanese government spending their way out of recessions. Maybe we should focus on public education and health and social welfare rather than funding a structurally oppressive bastion
What to do to stimulate the economy once tax rates are lowered to the point they only cover government wages, you Friedrich August von Hayek tryhards. then I suppose you'll ban unionism or wind up any collective bargaining so americans are on poorer wages than Chinese people, because let's face it, if the average labourer in the States worked for 1 cent aday, that would create more jobs...Shut the help up with your conservative misguided pseudo-Keynesian machinations.


The Japanese economy is kept down by four huge factors:

1. Wasteful government spending on meaningless projects, with trillions of Yen wasted on corruption and patronage
2. The aftermath of the Nikkei bubble, with its simultaneous real estate bubble that makes housing prohibitively expensive
3. The intrusion and intermeshing of government in to the economy, crowding out private enterprise
4. Huge budget deficits caused by #s 1 and 3

The economy is too big and too strong to reduce revenue to that point, and so the idea of lowering taxes to the bare minimum is impossible unless the economy literally stops growing.

Unionism and collective bargaining fit perfectly in a capitalist system; it doesn't mean companies will listen, but they work. It's when they get unreasonable (like higher pay and less work) that they lose. In a global economy, you have to compete globally.

The US worker earns what companies will pay for his skills, and even with outsourcing the wage growth is steady and above inflation.

The second time was in May 2000, when they overreacted and raised the funds rate when they should have either done nothing or at most raised it 25 bps. The problem was that they were obsessed with looking for inflation where it didn't exist.

I remember this. That caught everyone offguard when they did far more than expected.

big snip...Do the math people!!

I'd rather do reality vs theory. :D

I'd rather do reality vs theory. :D

LOL Celtlund!

Another thing to consider is that many US companies are cutting back health insurance coverages for their employees, leaving them vulnerable to huge medical bills or out of pocket expenses to shore up their shortfall in coverage.

Employers cut back on what's covered (http://moneycentral.msn.com/content/Insurance/Insureyourhealth/P123325.asp)

A Harvard study of bankruptcies in 2001 showed that roughly half were due to medical causes. Of those that filed for such medically related bankruptcies, 75% had insurance at the onset of illness.

"Medical debtors were 42% more likely than other debtors to experience lapses in coverage," according to the study. "Even middle-class, insured families often fall prey to financial catastrophe when sick."

Employers cut back on what's covered

More people are underinsured as companies face increased costs for providing or supplementing their employees' health coverage. Medical costs for companies increased by 59% in 2000 alone, and continued to rise by double-digits in subsequent years. General Motors alone spends close to $6 billion a year on health care for its employees and retirees.

Businesses can't afford the high rates charged by insurers, so they're passing at least some of the added costs on to their employees. They do this by raising deductibles, increasing the amount of co-pay for each doctor's visit or treatment, and cutting back on what's covered. "Costs have gone up and employees' medical benefits have eroded over the years," says Dr. Steve Neeleman, CEO of HealthEquity, a health-savings account administrator in Salt Lake City.

Since Bush the Younger took office, the share of the National Debt for every man, woman and child has increased from $19,000 to $26,589.

Enjoy!!

The increase in the National Debt:

1. We are now at war. Please remember we were attacked on 9/11.
2. Is less than projected because of the tax cuts.

Since Bush the Younger took office, the share of the National Debt for every man, woman and child has increased from $19,000 to $26,589.

Enjoy!!

The increase in the National Debt:

1. We are now at war. Please remember we were attacked on 9/11.
2. Is less than projected because of the tax cuts.

Another thing to consider is that many US companies are cutting back health insurance coverages for their employees, leaving them vulnerable to huge medical bills or out of pocket expenses to shore up their shortfall in coverage.

Employers cut back on what's covered (http://moneycentral.msn.com/content/Insurance/Insureyourhealth/P123325.asp)

A Harvard study of bankruptcies in 2001 showed that roughly half were due to medical causes. Of those that filed for such medically related bankruptcies, 75% had insurance at the onset of illness.

"Medical debtors were 42% more likely than other debtors to experience lapses in coverage," according to the study. "Even middle-class, insured families often fall prey to financial catastrophe when sick."

Employers cut back on what's covered

More people are underinsured as companies face increased costs for providing or supplementing their employees' health coverage. Medical costs for companies increased by 59% in 2000 alone, and continued to rise by double-digits in subsequent years. General Motors alone spends close to $6 billion a year on health care for its employees and retirees.

Businesses can't afford the high rates charged by insurers, so they're passing at least some of the added costs on to their employees. They do this by raising deductibles, increasing the amount of co-pay for each doctor's visit or treatment, and cutting back on what's covered. "Costs have gone up and employees' medical benefits have eroded over the years," says Dr. Steve Neeleman, CEO of HealthEquity, a health-savings account administrator in Salt Lake City.

There were multiple factors involved that no amount of government spending in the world could fix. There are some examples of government spending helping considerably (like the defense dept. spending during the Cold War), but it can also backfire and cause inflation.

It wasn't Clinton's fault at all, but rather a poor decision on the Fed's part. They failed twice:

The first was at the December 14th 1999 FOMC meeting. There were fears of Y2K, and the Fed decided not to raise rates; that provided the push for the NASDAQ to reach 4000, and then 5000. Had they raised rates, the bubble might have been averted and a soft landing engineered.

The second time was in May 2000, when they overreacted and raised the funds rate when they should have either done nothing or at most raised it 25 bps. The problem was that they were obsessed with looking for inflation where it didn't exist.

I can agree with all that. Its that what I said, but in a longer, mildly different way.

Equal effective marginal tax rates for all people and corporations. Even better would be a flat goods and services tax, on all goods and services. Immense taxation simplification and no need for all the stuff like tax returns, frankings or credits (albeit I'm not a tax lawyer or accountant, so don't crucify me if I have spoken any inaccuracy).

I would agree with a flat tax or even a consumption (national sales) tax. However, the dems are opposed to that because it puts to much burden on the "poor." :(

I'd rather do reality vs theory. :D
So then, math is not one of your better subjects? If that is the case, then it will be more difficult to deal with the realities?

The increase in the National Debt:

1. We are now at war. Please remember we were attacked on 9/11.
2. Is less than projected because of the tax cuts.
I really do fail to see how Bush's little failed adventure in Iraq has anything to do with 9/11

Hasn't blown here. I love how you try to equate what happens in Australia and Britain will happen here. Are we connected? Yes but that doesn't mean we'll be fully affected by what happens in those 2 nations. As for the rest of the world, it hasn't fully affect us either. The Housing market is BOOMING as is the Job market and so far it is showing no signs of slowing down.


Ah, yes, it has (Las Vegas comes to mind). Holding your hands over your ears and screaming "It won't happen if I don't hear it happening" doesn't really help things. The housing market will adjust, and it will adjust rather badly. The United States will be badly hurt by such an adjustment. Prices need to stabalize back to a reasonable level, and even a leveling off in prices would basically drain all the umpf from the economy, which has been oddly propelled by consumer debt (generally it's the corperations that dive in after a recession, but not now, the corperations are holding tight).

Snip...It wasn't Clinton's fault at all, but rather a poor decision on the Fed's part. They failed twice:

The first was at the December 14th 1999 FOMC meeting. There were fears of Y2K, and the Fed decided not to raise rates; that provided the push for the NASDAQ to reach 4000, and then 5000. Had they raised rates, the bubble might have been averted and a soft landing engineered.

The second time was in May 2000, when they overreacted and raised the funds rate when they should have either done nothing or at most raised it 25 bps. The problem was that they were obsessed with looking for inflation where it didn't exist.

Why was the Feds performance so dismal under Clinton while so good under Bush? Greenspan served under both. Is it possible the President has some influence on the Fed?

I would agree with a flat tax or even a consumption (national sales) tax. However, the dems are opposed to that because it puts to much burden on the "poor." :(

An efficient tax can pay for social welfare and tax cuts for the poor.

To look at the Australian introduction of the GST, the government was forced to exempt food to protect the poor; losing a great deal of the taxes efficiency.

If the tax had been placed on food, it could been used to give low income earners a tax break (as well as a smaller one for high income earners) and increase social security and still be some money left over. No one would have been worse off but the higher income earners, and they were getting plenty out of the package as it was.

Conclusion: All American political parties are nuts, some are more nuts than others. Other nations also have nuts politicians, although they don't seem quite as nutty as the Americans.

Why was the Feds performance so dismal under Clinton while so good under Bush? Greenspan served under both. Is it possible the President has some influence on the Fed?
It wasn't dismal. Greenspan's just human, and he thought the bubble wasn't as big as it was (he seems to be prone to doing this, froth my ass).

However, the fact remains that Americans are maxing out their credit options while the interest rates are low. This becomes a huge liability when interest rates start to rise.[/i]

Not all of us are, some of us are paying off our debt.

I've noticed on several threads you are very anti-American or at least give that impression. Do you mind telling us why you appear so hostile to Americans?

Not all of us are, some of us are paying off our debt.

I've noticed on several threads you are very anti-American or at least give that impression. Do you mind telling us why you appear so hostile to Americans?
I just read that the average US household is saving an approximate 0.0000000% of their household income. Good job guys.

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027
The real misleading aspect of 'Reaganomics' was not that tax cuts stimulate the economy (they do), but that the increased work generated compensates for the loss in revenues to the government. One economist estimated that the tax rates would have to be around 90% for there to be such a benefit. Not that I'm against tax cuts, I think all governments can cut a bit of fat, but it's just wrong to say that the government will have more revenues (Bush didn't, however).

Of course, Democrats are probably against tax cuts because it doesn't leave enough money for their social programmes. And the deficit is a problem too.

I really do fail to see how Bush's little failed adventure in Iraq has anything to do with 9/11

Iraq is not directly related to 9/11 but Afghanistan is directly related.

Iraq is not directly related to 9/11 but Afghanistan is directly related.
Most of the excess spending relates to Iraq at the moment.

Not all of us are, some of us are paying off our debt.

I've noticed on several threads you are very anti-American or at least give that impression. Do you mind telling us why you appear so hostile to Americans?
What gives you the impression that I am anti-American would be a better question?

Who have I been "hostile" towards?

BTW, if every American started paying off their debts, the economy would implode?

Ah, yes, it has (Las Vegas comes to mind). Holding your hands over your ears and screaming "It won't happen if I don't hear it happening" doesn't really help things. The housing market will adjust, and it will adjust rather badly. The United States will be badly hurt by such an adjustment. Prices need to stabalize back to a reasonable level, and even a leveling off in prices would basically drain all the umpf from the economy, which has been oddly propelled by consumer debt (generally it's the corperations that dive in after a recession, but not now, the corperations are holding tight).

Yes, some areas are in danger of a decline in housing prices, but most are not.
http://money.cnn.com/2005/08/03/real_estate/buying_selling/pmi_riskiest-markets/index.htm

How is the housing market related to the Bush tax cuts?

How is the housing market related to the Bush tax cuts?
Tax Cuts are related to Income, and Income is related to Housing.

Yes, some areas are in danger of a decline in housing prices, but most are not.
http://money.cnn.com/2005/08/03/real_estate/buying_selling/pmi_riskiest-markets/index.htm

How is the housing market related to the Bush tax cuts?
http://www.economist.com/displaystory.cfm?story_id=4079027


I believe this came about as a general tangent about the state of the economy.

What gives you the impression that I am anti-American would be a better question?

Who have I been "hostile" towards?

BTW, if every American started paying off their debts, the economy would implode?

We're trying to pay off our debt too.

An efficient tax can pay for social welfare and tax cuts for the poor.

To look at the Australian introduction of the GST, the government was forced to exempt food to protect the poor; losing a great deal of the taxes efficiency.

If the tax had been placed on food, it could been used to give low income earners a tax break (as well as a smaller one for high income earners) and increase social security and still be some money left over. No one would have been worse off but the higher income earners, and they were getting plenty out of the package as it was.

Conclusion: All American political parties are nuts, some are more nuts than others. Other nations also have nuts politicians, although they don't seem quite as nutty as the Americans.

I agree, there should not be a tax on food, medicine, or medical care.

I just read that the average US household is saving an approximate 0.0000000% of their household income. Good job guys.

Reference please. If you “just read” it you should have the reference handy. Thank you.

I agree, there should not be a tax on food, medicine, or medical care.

There's no tax on food in my state :D

Reference please. If you “just read” it you should have the reference handy. Thank you.
August 6th edition of the economist, economic and financial indicators. I quote
"America's GDP growth slowed to an annual rate of 3.4% this quarter, down from 3.8%, but year on year growth was unchanged at 3.6%. Americans saved 0.0% of their disposable income in June. Their personal savings rate has only been this low once before, in October 2001..."

Tax Cuts are related to Income, and Income is related to Housing.

Therefore, if taxes are cut and income goes up housing goes up. That means more house are being built and more people are being employed to build them. That means more people are employed and paying taxes. That means more property taxes are being paid. That means both local and federal tax revenue is being collected.

So that means the Bush tax cuts have stimulated the economy.

Therefore, if taxes are cut and income goes up housing goes up. That means more house are being built and more people are being employed to build them. That means more people are employed and paying taxes. That means more property taxes are being paid. That means both local and federal tax revenue is being collected.

So that means the Bush tax cuts have stimulated the economy.
Relation=/=causation. We've been over this before.

I'm not sure that's necessarily true, because the stimulated economy creates more jobs, etc., and produces more income to tax at a lower rate. The theory is that you come out ahead, tax wise.

There is some evidence to prove this, but I'll be man enough to admit I don't have the economic knowledge to back up my statement.

Well, it is true regarding tax, however, it depends on how tax is taken in; what the US needs is a complete overhaul of the whole system; for example, payroll tax - the biggest disincentive for *ANY* business to hire new people - every time they hire someone, their tax bill goes up - thats plain stupid.

Another one, land tax - as soon as the value of property increases, that acts as a disincentive to expand factories.

There are taxes in the US that are plain stupid, but there is not *ONE* person willing to take to the public service with a weed whacker, and cut the size of the public service and bloat back to size.

Lord knows, I thought NZ was bad when it came to bloat, the US must take top honours.

http://www.economist.com/displaystory.cfm?story_id=4079027


I believe this came about as a general tangent about the state of the economy.

1. Your reference was the global market and in June.
2. My reference was the US market and in August.

The subject was the US housing market. Housing markets in other countries does not affect the US housing market.

So that means the Bush tax cuts have stimulated the economy.
Who's disputing that?

Therefore, if taxes are cut and income goes up housing goes up. That means more house are being built and more people are being employed to build them. That means more people are employed and paying taxes. That means more property taxes are being paid. That means both local and federal tax revenue is being collected.
More like taxes are cut, and the Government makes $100 less. Those extra $100 are now in the population's hands, and some is saved, some is spent on Imports, and some is spent just like that. The Government takes money now and gets only $80 back.
Sorry mate, as much as you love tax cuts, the Laffer Curve thing just doesn't work.

1. Your reference was the global market and in June.
2. My reference was the US market and in August.

The subject was the US housing market. Housing markets in other countries does not affect the US housing market.
Your reference also refers to something that I've never even seen used before, and over a period of less then a year. A year is nothing, a year is a blink of an eye. The point remains that the US market will have to adjust, and even if it somehow adjusts without bursting, it will have a drastic effect on the US economy.

Housing markets in other countries does not affect the US housing market.
That's naive. Everything affects everything in Macroeconomics.

August 6th edition of the economist, economic and financial indicators. I quote
"America's GDP growth slowed to an annual rate of 3.4% this quarter, down from 3.8%, but year on year growth was unchanged at 3.6%. Americans saved 0.0% of their disposable income in June. Their personal savings rate has only been this low once before, in October 2001..."

OK. I appreciate the reference, but that was only one month, which by the way is during the vacation season.

OK. I appreciate the reference, but that was only one month, which by the way is during the vacation season.
2004 IV= 2.4
2005 I= 0.7
2005 II= 0.2
2005 (august)= 0.0

Well, it is true regarding tax, however, it depends on how tax is taken in; what the US needs is a complete overhaul of the whole system; for example, payroll tax - the biggest disincentive for *ANY* business to hire new people - every time they hire someone, their tax bill goes up - thats plain stupid.

Snip

Lord knows, I thought NZ was bad when it came to bloat, the US must take top honours.

I think you are under a misconception here. The company pays payroll tax to the government, but it is money that is withheld from the employee’s salary. This insures that the employee pays the tax. So, when a company hires a new employee their tax bill does not go up. The new employee is the one who pays the tax.

I think you are under a misconception here.
Speaking of misconceptions, I would appreciate an answer to my questions that I posted here (http://forums.jolt.co.uk/showpost.php?p=9390269&postcount=135).

Sorry mate, as much as you love tax cuts, the Laffer Curve thing just doesn't work.

I do beleive the Laffer Curve is only a theory. The Reagan and Bush II tax cuts are reality.

Speaking of misconceptions, I would appreciate an answer to my questions that I posted here (http://forums.jolt.co.uk/showpost.php?p=9390269&postcount=135).

Many of your posts on several threads have given me that impression. If you are not anti-American perhaps, I have misinterpreted what you were saying or misinterpreted the tone of your posts. If that is the case I apologize.

Actually, it's really kind of complicated...

See, according to Keynesian economics, the overall effect of a certain fiscal or monetary policy is largely determined by a thing called the multiplier effect. Now, there's a different multiplier for taxes and for government spending. The Tax Multiplier is -(change in Taxes)*(Marginal Propensity to Consume/Marginal propensity to save), meaning the amount cut or decreased in taxes is multiplied by the economy's overall tendency to consume, versus its overall tendency to save in income. The Government Spending multiplier is (change in government purchases)/(marginal propensity to save).

Already, we can see that the effect of Government Spending is greater than the effect of Taxes, because while Government Spending is putting money straight into peoples' pockets, a change in taxes rests soley on the decisions of consumers.

Now there's another problem. If we lessen taxes, that means there's supposedly more money to the consumer. HOWEVER, in an open economy, money can and WILL leak out via imports - we are sending money OUT to get products IN.

So the problem is that, with a tax cut, we're not only allowing people to SAVE more (and therefore letting money leak out into savings, versus into consumption), we're also letting more money go out into the world.

Now, the way that supply-siders such as Bush and Reagan proposed to keep everything nice and tidy, while still spending the same (if not MORE) money in government expenditures, is thru deficit spending.

This causes a problem, in that it assumes that tax revenues in the long-run will pay for the government's debt. But reality has shown that, in a modern, open economy, most of the consumption benefits from a tax cut tend to leak out of the economy in savings, foreign expenditures and other costs. Normally, this would have led to a depreciation in the value of the dollar, inflation, and the government would have had to raise taxes again. BUT, our economy has been floating on its current rate of overconsumption and deficit spending via money inputted into our economy by foreign economies buying our bonds - basically sequestering our debt overseas.

So you see, tax cuts, while they DO benefit the economy, tend to have less of an effect as some would have you believe.

~TDG

I agree, there should not be a tax on food, medicine, or medical care.

Considering what I said; shouldn't that be "I disagree."

Many of your posts on several threads have given me that impression. If you are not anti-American perhaps, I have misinterpreted what you were saying or misinterpreted the tone of your posts. If that is the case I apologize.
I have family in the US.
I have friends in the US.
I have been through or stayed in 21 of your States.
I have been to Disney World 4 times.
I have been to Disneyland once.
I have been to Universal Studios 5 times.
I have been to Chicago, Buffalo, Niagara Falls, New Haven, Detroit, San Francisco, Los Angeles, Sacramento, Williams, Las Vegas, Lake Tahoe, Washington, Fort Lauderdale, Miami, Orlando, Tampa Bay, Carmel, Monterey, Clearwater, Fort Myers, Mrytle Beach, Hollywood, Daytona Beach, Cleveland, Lake George, Elmira, Corning, and passed through many other towns and cities along the way.
I have ALWAYS enjoyed my vacations in the US.
I have met and/or had interactions with hundreds of Americans and I never had a problem, and was always or almost always treated well.

I was shocked by 9/11 and my heart went out to the American people
I supported the invasion of Afghanistan in retaliation for 9/11

THEN, the US invaded Iraq, which I believe is pure BS, and I took a harder look at US policies, and I don't like what I see.

As a result, I dislike Bush, his cronies, and his policies, all of which I think have or will harm present and future Americans. Some Americans can see this and others toe the party line. Then there is the Bush apologists who will defend Bush right, wrong or indifferent and that is even worse in my eyes.

Don't mistake my dislike for hate, for I truly hate no one. I cannot afford hate. However, some people on both sides of the issues, truly do hate each other and I can see that and that is too bad. Hate resloves nothing and in war, it just gets more people killed.

As far as this economic thread is concerned, I do care about the American economy for the simple reason that the US and Canada are so intertwined. The affluent Americans will not be adversely affected by the Bush razzle dazzle but so many middle and lower class Americans are getting screwed and they either don't want to know about it, can't understand it, or are blinded by the propaganda.

America has all the potential to be the best country in the world with all her wealth and resources, yet squanders it with bombs and bullets.

I would like America to be the best she can be, but if my views differ from yours, don't assume that makes me anti-American. as nothing could be further from the truth.

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027

All this argument on the premise of whether or not tax cuts stimulate the economy... At the end of day it IS generally accepted, and the reason for deviating from this policy is issues of equity.

As you learn in first year economics, this is a normative, not a positive concept.

Even if it is accepted that low tax rates are more efficient (less dead weight loss etc) many peoples' values are such that they are willing to have inefficient resource allocation via taxes for what they consider a more fair redistribution of wealth. C'est tout.

An across the board tax cut of X% is fair and equitable for all. Yes, those that make more $ will get more $ back, but everyone gets the same %. The government is not and should not be in the business of redistributing individual wealth.

That is you belief. But regardless, the point wasn't whether the tax cut was fair and equitable, it was about whether it was well designed to stimulate the economy. Which it wasn't.

Actually, the deficit is growing slower than the economy, so the amount as a percent of GDP is declining. The numbers don't matter when our per capita income is growing faster than the debt.

It may be at this particular point in time, but overall the debt/gdp ratio has increased during the Bush administration.

No. I'm sorry but this is not the USSR. The Private sector is responsible for most of the advancements for society.

Oh do you mean the privatly funed internet or global satelite system or computers, or jet planes, intergrated circuits. Sorry but all those things (some would call them great advances of society) were started and funded by the big bad governments then taken over by the private sector.

Oh do you mean the privatly funed internet or global satelite system or computers, or jet planes, intergrated circuits. Sorry but all those things (some would call them great advances of society) were started and funded by the big bad governments then taken over by the private sector.

Apparently you have great difficulty understanding the difference between 'most' and 'all'. Not to mention that private enterprise had much to do with each of your example - more so than the govt.

The contribution to the internet of Xerox, Steve Jobs and Bill Gates is undeniable.
The contribution to airline technology of Wilbur and Oroville Wright and the likes of Howard Hughes is undeniable.
The satellite network is put up by a government monopoly which outlaws competition. NASA has found privatizing many functions to be more efficient. ALL of the equipment used for a satellite launch is built by private companies contracted by NASA. Most of the satellite launches are funded by private enterprise launching a private satellite.
The Integrated Circuit was conceived of and manufactured privately - never by any government.

I notice that you use examples which were primarily US. If government is so innovative then please tell me what useful innovations were made in the last fifty years by any communist or socialist state? OK - I'll open it up for you - how about any innovation by ANY state other than the US in the last fifty years? Come on - did Ecuador invent something useful? How about Cuba? Russia? China?

That is you belief. But regardless, the point wasn't whether the tax cut was fair and equitable, it was about whether it was well designed to stimulate the economy. Which it wasn't.

And it did stimulate the economy!

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027
The government needs to get the money from somewhere. Like healthcare, education....

Apparently you have great difficulty understanding the difference between 'most' and 'all'. Not to mention that private enterprise had much to do with each of your example - more so than the govt. [/quoet]

Both statements in that are both untrue.

[quote]
The contribution to the internet of Xerox, Steve Jobs and Bill Gates is undeniable.


That's great except who really created itm why was it created and who funded it for the best part of 20 years before the private sector took even the slighest interest. The US government.


The contribution to airline technology of Wilbur and Oroville Wright and the likes of Howard Hughes is undeniable.


As was a guy called Whittle who invented the jet engine, with government money along with all the other inventors which really pushed the game along during WW1 through the interwar years way through world war two and the cold war. And of course the news composites have nothing to do with government technology.


The satellite network is put up by a government monopoly which outlaws competition. NASA has found privatizing many functions to be more efficient. ALL of the equipment used for a satellite launch is built by private companies contracted by NASA. Most of the satellite launches are funded by private enterprise launching a private satellite.



But the fact is none of that would have happened without Russians putting a certain little craft in space, without British and US governments funding computer programs, without the US governments funding of the Satellite program (long before any private company thought about it) this message would not be posted.

This is the thing, when something gets developed at Univeristy in Britain...hell most of the civilised world it's with government money. When someone invents something that the private sector doesn't want to touch it who funds it...the government.

Don't get me wrong private individuals do do a great deal but the majoirty of businesses are short sighted and are only interested in sure fire profit. That is why once an invention has been created it's important government money is there for them.

Unless of course you think the Sony Mini disc was a worth while cause and not another attempt for Sony to change the market for their own profiteering gains. :)

More jobs, better economy, unemployment down. Tax cuts do stimulate the economy. It happened under Reagan also, so why are the Democrats against tax cuts for all Americans?

http://news.yahoo.com/s/afp/20050806/bs_afp/useconomybush_050806172027
Well, I'm really late to the party here, but here's my two cents. It could be because of the consumerism that results from the tax cuts, as many Americans, including the current President, are fiscally irresponsible. They spend without saving. I read an article a few days ago that the savings rate in America had dropped to 0.0%. This means that people are now relying on their increasing cost of houses, which will generate an even bigger problem for generations to come, and on Social Security, which we all know is in dire straits and if it isn't radically fixed this instant, will spell certain doom upon the world in ten years when it merely begins to lose money.

Bush's tax cuts are adding to the $7.8 trillion debt, which will be nearly impossible to pay off, Reagan's successful trickle down theory did indeed work. America was getting drunk off of the trickle down, but under Bush I, we had the resulting hangover the next morning. Like Communism, trickle down economics is good in theory, but will companies and rich people really hold up their end of the deal by carrying out the trickling down part? I don't want my money in the hands of wealthy individuals and corporations.

In all, tax cuts stimulate the economy in the short term--but create far worse problems in the future. Once everyone with 0 savings begin to retire, it will place an even bigger burden on those in my generation and generations to come. This, it seems, is the cycle from the late 20th century through now; Republicans spend and spend and spend and give tax cuts and give more tax cuts, without any consideration of fiscal responsibility, then a Democrat comes along, and we like to actually have the money before we spend it, so they are obliged to repay the debt of the fiscally irresponsible Republicans, and the best way to do that is to get rid of the tax cuts. Of course then the Republicans somehow manipulate that into "raising taxes" and then republicans win more elections, making the debt worse and worse and worse until America falls into a financial crisis while bringing the entire world down with it and falls into a 12th century style anarchy. :p

Well, I'm really late to the party here, but here's my two cents. It could be because of the consumerism that results from the tax cuts, as many Americans, including the current President, are fiscally irresponsible. They spend without saving. I read an article a few days ago that the savings rate in America had dropped to 0.0%.

Savings dropped to 0% for one month. That is not a problem. That month happened to be June which is also the start of the vacation season so people will spend more of their disposable income rather than save it.

And it did stimulate the economy!

According to Bush. As I stated previously, the article quoted at the start of the thread cited absolutely no evidence of that. It just had a quote from Bush saying that it did, which of course is what he is going to claim, whether it is true or not. As I also pointed out previously, any economic growth the US has experienced during the Bush administration is primarily due to the massive drop in the value of the US dollar. The tax cut was not properly designed to stimulate the economy because it was too heavily targeted at too small a number of wealthy people, which was going to do nothing for productivity and arguably produce less of a trickle down effect than government spending would.

I would also like to point out that tax cuts can be detrimental to the economy in the long run depending where you cut the money from to make them. If you can generate actual efficiencies, fine. But if you just slash program spending and reduce service levels, it can be problematic, especially in areas like education. A less educated workforce is not going to be more productive, no matter how low your taxes are. Witness Toyota's recent decision to locate a plant in Ontario rather than in a lower tax jurisdiction in the US because they have better access to an educated workforce there.

I think you are under a misconception here. The company pays payroll tax to the government, but it is money that is withheld from the employee’s salary. This insures that the employee pays the tax. So, when a company hires a new employee their tax bill does not go up. The new employee is the one who pays the tax.

Even so; its yet another tax that needs to be adminstrate; yet another compliance cost for business.

Tax cuts do not necessarily stimulate the economy. If your economy is in a recession, giving money back to people by taking less taxes means that they will save more, rather than spend.

I think you are under a misconception here. The company pays payroll tax to the government, but it is money that is withheld from the employee’s salary. This insures that the employee pays the tax. So, when a company hires a new employee their tax bill does not go up. The new employee is the one who pays the tax.

Even so; its yet another tax that needs to be adminstrate; yet another compliance cost for business.

Just a follow up, you're thinking, in regards to payroll tax, as in PAYE/PAYG = Pay As You Earn/Go, in other words, normal income tax.

Pay roll tax is when the total pay roll of a company is added up - for example, 5 people being paid $100,000 each would net a total payroll of $500,000 - if the payroll tax is 3%, the company will have to pay $15,000 out of their OWN money, NOT the employees money, to pay the tax.

You can't take it out of the employees income because then it would be a lower amount and the whole thing wouldn't add up.

Its a tax DIRECTLY onto business - a stupid tax at that - why else would a state drop payroll taxes on business to attract companies, if they're the ones not paying it?

Tax cuts do not necessarily stimulate the economy. If your economy is in a recession, giving money back to people by taking less taxes means that they will save more, rather than spend.


No, not always.


Bush's idea was to give the tax cut to the upper 1% of earners, in hopes that they would have extra money to hire more employers...wicxh would create more jobs..wich would mean more people spending money back into the system.

It certainly didnt turn out that way.

Clinton did the same, only gave it to the lower earning brackets.
The economy boomed.

Why?

When someone making minimum wage gets a couple hundred extra dollars..what do they do with it?

Whoohoo!! ..they go right out and spend it!