End of an Era: Tax Cuts Losing Steam on Capitol Hill

[ATFFL]

Republicans should try cutting taxes for poor people.

How about getting rid of the income tax on anyone making under 50k a year?

Well, we have not had that, but the tax rates today are lower than they were before Bush took office.  On top of that, the standard deduction and exemption have increased.  In 2005 they were $8,200 for a single filer.  In 2001 (before the Bush cuts) they were $7450.

In 2001 someone who earned $15,000 would have owe $1,133 in taxes.  In 2005, someone earning the same amount owed $768.

Neat tax calculator

[ATFFL]

The economy has grown by 20% since 2003. Tax cuts are a big part of that, because so much money has been invested in new enterprise or in existing small business.

Dont forget the fact that the fed went on interest rate slashing spree post 9/11.  With interest rates at .5% its pretty hard for the economy not to grow.

Well, they are raising them all over the place and the economy is still outgrowing thier projections.  Tax revenue grew 250 billion dollars more than expected, mostly from a surge in corporate taxes and increased dividend taxes.  You know, the tax cut that the Democrats tried their hardest to kill since it only benefitted the wealthy.  Yeah, that is fueling the revenue growth.

This is mainly because the tax on dividends was so high that dividends were no longer a useful tool to attract investors.  So companies stopped offering them.  Following the tax cut, dividends became a useful tool again and more companies are offering them. 

[ATFFL]

Help!  Help!  I'm rich and I keep getting tax cuts.  Make it stop!    Sorry folks, but I am far from the upper class that the left constantly harps about as receiving the benefits of tax cuts, yet my tax rate has been lower since the first tax cuts went into effect.  The only reason why my tax payments are higher are due to proceeds from stock sales and the jump in housing prices (which the VA tax rate on that has been cut as well).  So . . . I have lower tax rates yet the government is receiving more revenue from an improving tax base.  Seems like the tax cuts work.  Keep them/extend them.

I think the relationship you cite is a bit flawed. Due to inflation, government revenues will continue to increase; they haven't been going up as quickly as they did before the Bush tax cuts did. In addition, the fact that spending hasn't been cut has helped to prevent the economy from going totally down the drain; if you are willing to run a massive deficit, you can keep the economy going strong despite tax cuts, but in the long term the country will suffer for the debt, especially since so much of it is now owed to foreign citizens.

One can make arguments for the tax cuts on other grounds, but the supply side theory that tax cuts bring in more revenue for the government than they cost it has been fairly clearly debunked in my opinion.

It's somewhat akin to arguing that you'll make more money by working fewer hours, since this would give you more opportunity to search for a higher paying job (and not just more money per hour worked, but actually more total money).

Yes, everyone's taxes are lower than they were before Bush, but for the vast majority of people the benefit of those cuts hasn't come anywhere close to balancing out the negative effects.

The Reagan tax cuts saw income tax revenus grow at the normal rate.  No loss as many expected.  Yet total revenue grew due to non-tax sources.  Now, Clinton does not see huge growth in revenue until after the Republicans take Congress.

Since the 2003 cuts, revenue growth under Bush has been greater than under Clinton.  This is because of both immediate tax growth and the outside revenue growth effect of tax cuts.

The argument that tax revenues fall after a cut is true.  They usually do decrease for a year or two.  After that, they rise faster than inflation and total revenue has always risen.

Obviously we cannot expect to just keep slashing taxes and seeing total revenue rise.  But the reality of the numbers shows Bush has not cut them below the point where they are effective.