Study finds that tax cuts don't pay

[Shug2003 1]

by Kevin G. Hall

Knight Ridder Newspaper, Thursday, May 18, 2006

WASHINGTON- When President Bush signed legislation Wednesday to extend lower tax rates for capital gains and dividend income thorugh 2010, he suggested that his tax cuts are behind the surge of new revenue into the Treasury, and implied tht it's enough to offset the revenue lost by these reductions.

At a ceremony on the White House lawn, Bush said his tax cuts have helped the economy grow, "which means more tax revenue for the federal treasury."

That's just not true. A host of studies, some of them written by economists who served in the Bush administration, have concluded that tax reductions mean less money for the Treasury. The cuts Bush extended Wednesday will cost the Treasury an estimated $70 Billion over five years. This may help spur economic growth, but they still lose more revenue than they generate. And unless they're matched by lower federal spending, they worsen federal budget deficits.

To be sure, tax revenues grew by $274 billion in 2005, a 15 percent increase over the previous year, and receipts are growing this year too. But does that mean the president's 2001 and 2003 tax cuts generated enough additional revenue to pay for themselves? "No." said Douglas HOltz-Eakin. He was the chief economist for Bush's Council of Economic Advisors in 2001 and 2002, then the director of the nonpartisan Congressional Budget Office Until late last year.

Holtz-Eakin said other factors were beind the surge in tax revenues. One is that revenues rise as the population and the economy grow. Revenues would have risen in the post 2001 economic recovery with or without Bush's tax reductions, just as they did in the 90's. Treasury Secretary John Snow conceded Tuesday that the much-touted tax cuts for capital gains and dividend income don't drive today strong economy. Asked by Knight Ridder if the tax reductions paid for themselves,Snow acknowledged that they don't. He also acknowledged that economic growth and stock market gains were strong in the 1990's when the capital gains tax stood at 20 percent and dividend income was taxed at rates as high as 38.6 percent. Bush and Congress cut both to 15 percent in 2003; the legislation that the president signed Wednesday extended that rate through 2010.

[CarolinaTiger 0]

doesn't this run contrary to a just-released report by the GAO or CBO?

[quietfan 233]

Both George W. Bush's tax cuts and Ronald Reagan's tax cuts were accompanied by two periods of the most massive government deficit spending in history. Which begs the question:

Were any perceived boosts to the economy due to tax cuts, or due to the gov't flooding the market with lots of borrowed cash?

[Tigermike 3,039]

Both George W. Bush's tax cuts and Ronald Reagan's tax cuts were accompanied by two periods of the most massive government deficit spending in history.  Which begs the question:

Were any perceived boosts to the economy due to tax cuts, or due to the gov't flooding the market with lots of borrowed cash?

235812[/snapback]

It would be great to find out wouldn't it? So if a democrat is elected we can expect a tax cut with spending restraints?

I think there needs to be a mammoth grass roots campaign for a balanced budget amendment and for a law prohibiting pork amendments to appropriation bills. If the legislator does not have the nads to present a bill for whatever they want or need, there should be no means for them to hide it in other bills. Money for California in the Katrina bill is just the tip of a massive ice berg.

[quietfan 233]

... a law prohibiting pork amendments to appropriation bills.  If the legislator does not have the nads to present a bill for whatever they want or need, there should be no means for them to hide it in other bills.  Money for California in the Katrina bill is just the tip of a massive ice berg.

235815[/snapback]

This works for me!

I'm not sure about the technical details of bill (precisely how does Congress define a "pork" amendment and who gets to decide what is and is not?), but if they can be worked out, it'd be great.

[DKW 86 7,429]

From CBO.gov

1980 517.1( Last year Carter’s with 70% Marginal Tax Rates.)

Total Combined Federal Revenues from Ind, Corps, Estates, etc.

1981 599.3

1982 617.8 (First Full year under Reagan Tax Cuts)

1983 600.6

1984 666.5

1985 734.1

1986 769.2 (This is usually the year for beef on the Tax Cut Policy. Revenues grew $252.1BN)

1987 854.4

1988 909.3

1989 991.2

1999 1,827.6 (Last full year before Clinton-Gore Recession.)

2000 2,025.5 ( Clinton Gore Recession starts in Q2 and is declared Q4)

2001 1,991.4 (Tax cuts imposed, 9-11, and Economy takes huge losses in IT, Airlines, etc.)

2002 1,853.4 (First full year without major economic upheaval, BUT deficit spending is out of control.)

2003 1,782.5

2004 1,880.3

2005 2,153.9

The question is not that revenues went up, they did. I dont know the hocus pocus on REAL numbers adjusted for inflation but I suspect there is major hanky-panky going on there. The other side of the equation is what made the numbers go up. Well, Keynes would tell you the defict did. A supply sider would tell you the tax cut did. Likely both did to some degree. Longterm though, the balanced budget is the ideal and we need to get there immediately.

[BamaGrad03 0]

Whether it helps or not...any tax cut is a good one. Double taxation of dividends is RIDICULOUS. as is the AMT and death tax.

I still fail to see why we need a reason to cut taxes other than the fact that it gives back money to people who are already being overly taxed...and no its not just rich people. Its AMERICANS who pay taxes.

[TexasTiger 12,958]

From CBO.gov

1980 517.1( Last year Carter’s with 70% Marginal Tax Rates.)

Total Combined Federal Revenues from Ind, Corps, Estates, etc.

1981 599.3

1982 617.8 (First Full year under Reagan Tax Cuts)

1983 600.6

1984 666.5

1985 734.1

1986 769.2 (This is usually the year for beef on the Tax Cut Policy. Revenues grew $252.1BN)

1987 854.4

1988 909.3

1989 991.2

1999 1,827.6 (Last full year before Clinton-Gore Recession.)

2000 2,025.5 ( Clinton Gore Recession starts in Q2 and is declared Q4)

2001 1,991.4 (Tax cuts imposed, 9-11, and Economy takes huge losses in IT, Airlines, etc.)

2002 1,853.4 (First full year without major economic upheaval, BUT deficit spending is out of control.)

2003 1,782.5

2004 1,880.3

2005 2,153.9

The question is not that revenues went up, they did. I dont know the hocus pocus on REAL numbers adjusted for inflation but I suspect there is major hanky-panky going on there. The other side of the equation is what made the numbers go up. Well, Keynes would tell you the defict did. A supply sider would tell you the tax cut did. Likely both did to some degree. Longterm though, the balanced budget is the ideal and we need to get there immediately.

235889[/snapback]

More lies. You indicate all this "info" came from the CBO, and add your own editorial comments. And then you lie in your commentary.

What does the CBO say about this:

2000 2,025.5 ( Clinton Gore Recession starts in Q2 and is declared Q4)

[AURaptor 1,125]

More lies. You indicate all this "info" came from the CBO, and add your own editorial comments. And then you lie in your commentary.

What does the CBO say about this:

QUOTE

2000 2,025.5 ( Clinton Gore Recession starts in Q2 and is declared Q4)

So, what's your beef? That the Clinton/Gore recession started in Q2? Or that it started in Q4? Or that there ever WAS a Clinton/Gore recession?

[DKW 86 7,429]

Gee Tex, I put myu comments in (parentheses) noting just when the tax cuts actually took effect for the reader. Bush got a recession that was declared in December of 2000. Definition of a recession is: "3 or more quarters of negative economic growth." The negative economic growth strarted in Q2 and continued on thru Q4 and beyond. Bush had a recession going as he entered office.

TT, I am not slamming C-G here at all. Hell just look at the eceonmic boom mwere in from 92 to 2000. The recession of 91 was caused by the Mitchell-Bush tax deal in 1990. It cost 41 his job. We were already emerging fromit when C-g took office tho. The Recession was over in December of 92 but all you heard was "the worst economy in 50 years." Remember I didnt vote for 41 ever!

Now, I see presidents getting too much credit and too much blame. Recessions happen. In 2000 we had the beginnings of the IT bubble burst. We had 8 years of great growth. The recession was just cyclical. It happens!

The balanced budgets we saw in 98-2000 were the ideal and I hope we get back to them. I also totally oppose the new tax cuts as unnecessary and bad for the deficit too. Tex, you are over-reacting by a mile here.

[TexasTiger 12,958]

Gee Tex, I put myu comments in (parentheses) noting just when the tax cuts actually took effect for the reader. Bush got a recession that was declared in December of 2000. Definition of a recession is: "3 or more quarters of negative economic growth." The negative economic growth strarted in Q2 and continued on thru Q4 and beyond. Bush had a recession going as he entered office.

TT, I am not slamming C-G here at all. Hell just look at the eceonmic boom mwere in from 92 to 2000. The recession of 91 was caused by the Mitchell-Bush tax deal in 1990. It cost 41 his job. We were already emerging fromit when C-g took office tho. The Recession was over in December of 92 but all you heard was "the worst economy in 50 years." Remember I didnt vote for 41 ever!

Now, I see presidents getting too much credit and too much blame. Recessions happen. In 2000 we had the beginnings of the IT bubble burst. We had 8 years of great growth. The recession was just cyclical. It happens!

The balanced budgets we saw in 98-2000 were the ideal and I hope we get back to them. I also totally oppose the new tax cuts as unnecessary and bad for the deficit too. Tex, you are over-reacting by a mile here.

235958[/snapback]

Perhaps it is an overreaction. The CBO start of that recession was March 2001. Some economists believe it started earlier. The motivation of most calling it the "Clinton-Gore recession", however, seems political. Recessions are more commonly referred to by the year(s) they are in effect. It certainly wouldn't be fair to call it the "Bush recession" because it officially started in 2001.

Bush I lost his job for a number of reasons. The tax increase hurt mostly because it damaged his credibility, not the economy. ("Read my lips...")

We are told that Clinton had the largest tax increase in history, and yet the economy grew at a rapid rate. Spending was relatively restrained, though, and deficit came down every year until there was a surplus. Bush I had unfortunate timing with the business cycle. Clinton benefited from good timing with the business cycle and whoever was going to be president in 2001 was going to suffer from the timing of the business cycle.

But Clinton took advantage of his positive timing by having a sound fiscal policy. He didn't work magic, but he does deserve credit for fiscal restraint.

[CCTAU 3,329]

Fiscal restraint by cutting the military and the intelligence community ended up cositing us way more in the future. But, hey, he used restraint.

Please clarify which part of the restraint you agreed with.

There is always a "cost" involved with every decision made. Pay now or pay later.

I guess if you choose pay later, it can always be blamed on the "other guy."

[TexasTiger 12,958]

Fiscal restraint by cutting the military and the intelligence community ended up cositing us way more in the future. But, hey, he used restraint.

Please clarify which part of the restraint you agreed with.

There is always a "cost" involved with every decision made. Pay now or pay later.

I guess if you choose pay later, it can always be blamed on the "other guy."

236026[/snapback]

So you think enriching Halliburton has made us safer? Are your ports any safer? Borders any more secure? Over a trillion dollars in deficit spending under Bush and you think that has made us "safer"? Sorry, I don't.

[Tigermike 3,039]

Fiscal restraint by cutting the military and the intelligence community ended up cositing us way more in the future. But, hey, he used restraint.

Please clarify which part of the restraint you agreed with.

There is always a "cost" involved with every decision made. Pay now or pay later.

I guess if you choose pay later, it can always be blamed on the "other guy."

236026[/snapback]

So you think enriching Halliburton has made us safer? Are your ports any safer? Borders any more secure? Over a trillion dollars in deficit spending under Bush and you think that has made us "safer"? Sorry, I don't.

236079[/snapback]

Then elect a dimocrat, cut back on all branches of the military, the CIA, the NSA, the Border Patrol and raise taxes. That would definitely make you feel safer wouldn't it?

Where are the terrorists fighting?

[TexasTiger 12,958]

Fiscal restraint by cutting the military and the intelligence community ended up cositing us way more in the future. But, hey, he used restraint.

Please clarify which part of the restraint you agreed with.

There is always a "cost" involved with every decision made. Pay now or pay later.

I guess if you choose pay later, it can always be blamed on the "other guy."

236026[/snapback]

So you think enriching Halliburton has made us safer? Are your ports any safer? Borders any more secure? Over a trillion dollars in deficit spending under Bush and you think that has made us "safer"? Sorry, I don't.

236079[/snapback]

Then elect a dimocrat, cut back on all branches of the military, the CIA, the NSA, the Border Patrol and raise taxes. That would definitely make you feel safer wouldn't it?

Where are the terrorists fighting?

236080[/snapback]

Do you know how many Border personnel Bush cut from his last budget?

[Tigermike 3,039]

Fiscal restraint by cutting the military and the intelligence community ended up cositing us way more in the future. But, hey, he used restraint.

Please clarify which part of the restraint you agreed with.

There is always a "cost" involved with every decision made. Pay now or pay later.

I guess if you choose pay later, it can always be blamed on the "other guy."

236026[/snapback]

So you think enriching Halliburton has made us safer? Are your ports any safer? Borders any more secure? Over a trillion dollars in deficit spending under Bush and you think that has made us "safer"? Sorry, I don't.

236079[/snapback]

Then elect a dimocrat, cut back on all branches of the military, the CIA, the NSA, the Border Patrol and raise taxes. That would definitely make you feel safer wouldn't it?

Where are the terrorists fighting?

236080[/snapback]

Do you know how many Border personnel Bush cut from his last budget?

236081[/snapback]

Since you only bring up the border patrol cuts, it must be safe to assume you are OK with the other cuts mentioned.

[TexasTiger 12,958]

Fiscal restraint by cutting the military and the intelligence community ended up cositing us way more in the future. But, hey, he used restraint.

Please clarify which part of the restraint you agreed with.

There is always a "cost" involved with every decision made. Pay now or pay later.

I guess if you choose pay later, it can always be blamed on the "other guy."

236026[/snapback]

So you think enriching Halliburton has made us safer? Are your ports any safer? Borders any more secure? Over a trillion dollars in deficit spending under Bush and you think that has made us "safer"? Sorry, I don't.

236079[/snapback]

Then elect a dimocrat, cut back on all branches of the military, the CIA, the NSA, the Border Patrol and raise taxes. That would definitely make you feel safer wouldn't it?

Where are the terrorists fighting?

236080[/snapback]

Do you know how many Border personnel Bush cut from his last budget?

236081[/snapback]

Since you only bring up the border patrol cuts, it must be safe to assume you are OK with the other cuts mentioned.

236084[/snapback]

You never responded to this:

So you think enriching Halliburton has made us safer? Are your ports any safer? Borders any more secure? Over a trillion dollars in deficit spending under Bush and you think that has made us "safer"?

[Tigermike 3,039]

And you never responded to this.

Where are the terrorists fighting?

[TexasTiger 12,958]

And you never responded to this.

Where are the terrorists fighting?

236089[/snapback]

You never responded first.