Well if it is 'well documented' then you shouldn't have any problem whatsoever coming up with something to back up your claim other than leftwing propaganda sites should you?
I gave you a link to back up my opinion. Give me a link to back up yours from somebody with at least close to the credentials of the CATO Institute.
A revealing analysis by Ed Rubenstein, "When Less Is More: Tax Lessons of the 1990s," in the October 31st edition of the on-line public policy weekly, IntellectualCapital.com, reached just this conclusion: reduce tax rates on the wealthy and their share of tax payments will increase.
Rubenstein looked at three significant changes in tax policy enacted in the '80s and '90s: the Reagan tax cut of 1981, and the Bush and Clinton tax increases of 1990 and 1993. His conclusion: the wealthy paid significantly more taxes after tax rates were cut in 1981; they paid much less in taxes when rates were raised by President Bush in 1990; and not much more after the Clinton tax increases of 1993.
Rubenstein's data demonstrate that four years after the Reagan tax cuts of 1981 "overall tax collections increased by 16%" but "people making more than $200,000 were paying 127% more taxes in 1985 than they had been in 1981." IRS data show that people with incomes of $100,000-200,000 were paying 41% more; $200,000-500,000 76% more; and those with incomes above $500,000, 201% more taxes. All this while marginal tax rates on these people were dropping from 70% to 28%.
The Bush tax rate increases of 1990 had just the opposite effect. His new 31% tax bracket for people making $200,000 or more reduced tax payments for those taxpayers by $2.5 billion, or about 2.4%. Rubenstein explains: "But for everyone else, [those with incomes less than $200,000] tax payments actually rose, by $3.6 billion, or 1%. This odd dichotomy makes it difficult to blame the entire reduction in income tax revenues on a weak economy. The rich didn't have a bad year, they merely changed their behavior in response to higher tax rates. They bought more municipal bonds, converted ordinary income to capital gains, worked less, and shifted discretionary income to 1990, when rates were lower. In the process, they foisted a larger share of the tax burden on less affluent taxpayers...."
The Clinton tax increase adds further basis to Rubenstein's thesis. Like Bush, Clinton created a new, higher rate bracket for the wealthy: 39.6% instead of 31% on individuals earning more than $200,000. One would think that this higher rate would have produced higher tax payments by the very wealthy. It did, 11.4% more revenue in 1993 than in 1992. But tax revenues from the $100,000-200,000 income individuals - to whom the new rate did not apply - rose about the same amount, 11.7%. So, "instead of collecting an extra $16 billion from taxpayers in the $200,000+ income group, as was forecast, Uncle Sam received just $5 billion."
Rubenstein analyzed what happened. "In analyzing the tax results, Harvard economist Martin Feldstein finds that affluent people reported nearly 9% less taxable income in 1993 than they would have at the old tax rates. This was accomplished in many ways. High income taxpayers made more aggressive use of existing tax loopholes. Or they simply worked less. Working wives seemed especially affected by higher tax rates. The percentage of families with two or more earners fell from 58.2% in 1989 to 56.4% in 1993."
"At the end of the day," Rubenstein concludes, "income tax revenues fell to 9.3% of personal income in 1993, down from 9.6% in 1989, when the top rate was still 28%."
The bottom line is simply this: "Federal income tax rates for affluent taxpayers were increased twice in the 1990s. Wealthy taxpayers, however, account for a smaller share of income tax payments today than before the rate hikes."
Raising tax rates on the wealthy turns out to be a net loss; the economy suffers but the wealthy are unaffected. Incentives to save and invest and work are reduced; only class warfare rhetoric is increased.
So, liberals, if you want to soak the rich, forget Karl Marx and all that egalitarian rhetoric. Just cut their tax rates; then they'll pay more.
http://www.ncpa.org/oped/dupont/nov796.html
The bottom line is simply this: "Federal income tax rates for affluent taxpayers were increased twice in the 1990s. Wealthy taxpayers, however, account for a smaller share of income tax payments today than before the rate hikes."
Check out the bios of those at the site Cyclop, and then tell me that it is a right wing nut house. And then show me how they use anything but credentialed people using real numbers to arrive at their conclusions about anything. They are another group who has been highly critical of the George W. Bush administration.
I don't know that there ARE any bios at the site. I went elsewhere to get the bios and checked them from sites that even a leftwing partisan idiot would find acceptable.
The article as well as the CATO piece does address the OMB stuff you posted. A single year's revenues is not where you look for economic trends following any government initiative.
Were you serious when you said you studied economics, Fox? I shouldn't have to be explaining stuff like this. It's simple.
Cyclo wrote:Quote:Were you serious when you said you studied economics, Fox? I shouldn't have to be explaining stuff like this. It's simple.
I often wonder about that too! Book learning needs to be supported by some real world experience to understand the reality. She usually takes many paragraphs to explain something that can be said in a few sentences. She also fails to understand that there are conflicting opinions concerning issues of economics and politics that are really subjective (and not objective), but she seems to favor opinions that supports her pre-conceived beliefs.
Foxfyre wrote:
Check out the bios of those at the site Cyclop, and then tell me that it is a right wing nut house. And then show me how they use anything but credentialed people using real numbers to arrive at their conclusions about anything. They are another group who has been highly critical of the George W. Bush administration.
I don't care about the bios on a site which has such an obvious partisan slant. The entire thing exists to promote private solutions to government problems, it isn't exactly a non-partisan site. Like the ones you request that I use. If you are going to complain about sources you should practice more diligence yourself.
Fox, present your own argument, please. Can you at least admit the two facts that I posted above - that Reagan raised taxes several times, and Clinton's term led to huge increases in revenues collected?
Please address the OMB data I provided showing that what I claimed was true. Surely you don't consider them to be partisan.
I have already discussed the Reagan tax increases--NUMEROUS TIMES ON THIS THREAD AND HOW MANY MORE TIMES DO I NEED TO SAY THAT?--and I can see from the data that I posted from government records that these did not appreciably stimulate the economy but his bold reduction of tax rates did. Can you at least admit that?
And if you had bothered to read the information that I have produced, you would see that the Clinton tax increase did not produce HUGE revenues as you claim, most especially from the rich, and rather they took more money from the unrich. His later reduction in capital gains tax however did produce a dramatic increase in both revenues and economic growth.
Peter Wallison, who was White House counsel to President Reagan, responded to my analysis in the New York Times on October 26. He pointed to Ronald Reagan's resistance to tax increases in 1982, citing passages from Reagan's diary that were published in his autobiography, An American Life. The gist of Wallison's article is that Ronald Reagan successfully resisted efforts by his staff and many in Congress to raise taxes, thereby ensuring the victory of Reaganomics.
The only problem with this analysis is that it is historically inaccurate. Reagan may have resisted calls for tax increases, but he ultimately supported them. In 1982 alone, he signed into law not one but two major tax increases. The Tax Equity and Fiscal Responsibility Act (TEFRA) raised taxes by $37.5 billion per year and the Highway Revenue Act raised the gasoline tax by another $3.3 billion.
According to a recent Treasury Department study, TEFRA alone raised taxes by almost 1 percent of the gross domestic product, making it the largest peacetime tax increase in American history. An increase of similar magnitude today would raise more than $100 billion per year.
In 1983, Reagan signed legislation raising the Social Security tax rate. This is a tax increase that lives with us still, since it initiated automatic increases in the taxable wage base. As a consequence, those with moderately high earnings see their payroll taxes rise every single year.
In 1984, Reagan signed another big tax increase in the Deficit Reduction Act. This raised taxes by $18 billion per year or 0.4 percent of GDP. A similar-sized tax increase today would be about $44 billion.
1981 599.3 First year of Reagan Administration
1982 617.8
1983 600.6
1984 666.5
1985 734.1
1986 769.2
1987 854.4
1988 909.3 Last year of Reagan Administration
Difference between 1st & last year
310.60 or avg growth of 38.83 per year
April 1996
The Reagan Tax Cuts: Lessons for Tax Reform
During the summer of 1981 the central focus of policy debate was on the Economic Recovery Tax Act (ERTA) of 1981, the Reagan tax cuts. The core of this proposal was a version of the Kemp-Roth bill providing a 25 percent across-the-board cut in personal marginal tax rates. By reducing marginal tax rates and improving economic incentives, ERTA would increase the flow of resources into production, boosting economic growth. Opponents used static revenue projections to argue that ERTA would be a giveaway to the rich because their tax payments would fall.
The criticism that the tax payments of the rich would fall under ERTA was based on a static conception of human behavior. As a 1982 JEC study pointed out,[1] similar across-the-board tax cuts had been implemented in the 1920s as the Mellon tax cuts, and in the 1960s as the Kennedy tax cuts. In both cases the reduction of high marginal tax rates actually increased tax payments by "the rich," also increasing their share of total individual income taxes paid. Unfortunately, estimates of ERTA by the Democrat-controlled CBO continued to show falling tax payment by upper income taxpayers, even after actual IRS data had become available showing a surge of income tax payments by affluent taxpayers.
Given the current interest in tax reform and tax relief, a review of the effects of the Reagan tax cuts on taxpayer behavior and tax burden provides useful information. During the 1980s ERTA had reduced personal tax rates by about 25 percent, while the Tax Reform Act of 1986 chopped them yet again.
Tax Rates and Tax Revenues
High marginal tax rates discourage work effort, saving, and investment, and promote tax avoidance and tax evasion. A reduction in high marginal tax rates would boost long term economic growth, and reduce the attractiveness of tax shelters and other forms of tax avoidance. The economic benefits of ERTA were summarized by President Clinton's Council of Economic Advisers in 1994: "It is undeniable that the sharp reduction in taxes in the early 1980s was a strong impetus to economic growth." Unfortunately, the Council could not bring itself to acknowledge the counterproductive effects high marginal tax rates can have upon taxpayer behavior and tax avoidance activities.
Since 1984 the JEC has provided factual information about the impact of the tax cuts of the 1980s. For example, for many years the JEC has published IRS data on federal tax payments of the top 1 percent, top 5 percent, top 10 percent, and other taxpayers. These data show that after the high marginal tax rates of 1981 were cut, tax payments and the share of the tax burden borne by the top 1 percent climbed sharply. For example, in 1981 the top 1 percent paid 17.6 percent of all personal income taxes, but by 1988 their share had jumped to 27.5 percent, a 10 percentage point increase. The graph below illustrates changes in the tax burden during this period.
Click here to see Figure 1.
The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988.
A middle class of taxpayers can be defined as those between the 50th percentile and the 95th percentile (those earning between $18,367 and $72,735 in 1988). Between 1981 and 1988, the income tax burden of the middle class declined from 57.5 percent in 1981 to 48.7 percent in 1988. This 8.8 percentage point decline in middle class tax burden is entirely accounted for by the increase borne by the top one percent.
Several conclusions follow from these data. First of all, reduction in high marginal tax rates can induce taxpayers to lessen their reliance on tax shelters and tax avoidance, and expose more of their income to taxation. The result in this case was a 51 percent increase in real tax payments by the top one percent. Meanwhile, the tax rate reduction reduced the tax payments of middle class and poor taxpayers. The net effect was a marked shift in the tax burden toward the top 1 percent amounting to about 10 percentage points. Lower top marginal tax rates had encouraged these taxpayers to generate more taxable income.
The 1993 Clinton tax increase appears to having the opposite effect on the willingness of wealthy taxpayers to expose income to taxation. According to IRS data, the income generated by the top one percent of income earners actually declined in 1993. This decline is especially significant since the retroactivity of the Clinton tax increase in that year limited the ability of taxpayers to deploy tax avoidance strategies, temporarily resulting in an increase in their tax burden. Moreover, according to the FY 1997 Clinton budget submission, individual income tax revenues as a share of GDP will be lower during the first four years of the Clinton tax increase, which include the effects of the 1990 tax increase, than under the last four years of the Reagan tax changes (FY 1986-89). Furthermore, according to a study published by the National Bureau for Economic Research,[2] the Clinton tax hike is failing to collect over 40 percent of the projected revenue increases.
Incidentally, the claim that unrealistic supply side Reagan Administration revenue projections caused large budget deficits during the 1980s is false. Nonetheless, this false allegation is often used against current tax reform proposals. The official Reagan revenue projections immediately following enactment of ERTA did not assume huge revenue increases, and were actually quite close to the CBO revenue projections. Even the Democrat-controlled CBO projected that deficits would fall after the enactment of the Reagan tax cuts.
The real problem was a recession that neither CBO nor OMB could foresee. Even so, individual income tax revenues rose from $244 billion in 1980 to $446 billion in 1989.
Conclusion
The Reagan tax cuts, like similar measures enacted in the 1920s and 1960s, showed that reducing excessive tax rates stimulates growth, reduces tax avoidance, and can increase the amount and share of tax payments generated by the rich. High top tax rates can induce counterproductive behavior and suppress revenues, factors that are usually missed or understated in government static revenue analysis. Furthermore, the key assumption of static revenue analysis that economic growth is not affected by tax changes is di sproved by the experience of previous tax reduction programs. There is little reason to expect
http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm
June 10, 2004
Retrospective on the 1981 Reagan Tax Cut
edited by Andrew Chamberlain
The passage of the Reagan tax cut""the Economic Recovery Tax Act (ERTA)""in August 1981 was a watershed event in the history of federal taxation.
The centerpiece of the bill was an across-the-board 25 percent cut in individual marginal rates. However, the bill also included a number of lesser-known reforms that have had a dramatic and lasting impact on the Internal Revenue Code""indexation of tax rates to end ““bracket creep,”” improved tax treatment of depreciation and lease payments, reformed tax treatment of overseas income, and more.
As a tribute to the Reagan tax legacy, the Tax Foundation has assembled the following historical retrospective on the Reagan tax plan, featuring a collection of original Tax Foundation analyses conducted in the wake of the ERTA’’s passage nearly a quarter-century ago. All documents are in PDF format:
Special Report: The Economic Recovery Tax Act of 1981
Read the original Tax Foundation analysis of the Reagan tax-cut plan, from its steep reduction in marginal rates to its indexation of tax rates to end the hidden tax of ““bracket creep.”” Originally published September 1, 1981 ""a Tax
Foundation classic.
The Fairness Issue
Was the 1981 tax cut a ““fair”” tax cut? A common criticism of the Reagan plan was that it disproportionately benefited the wealthy. In this classic response, Tax Foundation economists show that tax cuts only tilt unfairly toward high-income people if they eliminate a larger percentage of their tax burden. But since ERTA’’s tax cut was proportional""giving equal percentage tax cuts to all income brackets""they argue that it was therefore fair.
Evolution of the Federal Tax System: 1954-1983
At the time, the Reagan cut was seen by many economists as radical and unprecedented. To see why, the cuts must be viewed in historical context. This Tax Foundation memo provides a brief history of the federal tax code leading up to the ERTA’’s passage, underscoring its historical importance.
The IRAs are Coming…… And Some Other Breaks, Too
The Reagan tax plan is sometimes described as a short-run policy that was designed to bump the U.S. economy out of recession. But fully one-fourth of the cuts were geared toward long-run economic growth, through provisions aimed at boosting savings and capital accumulation.
Debate Over Business Taxes
Most analyses of the Reagan plan focus on individual taxes. But the ERTA also made sweeping reforms to business taxes""including the implementation of the Accelerated Cost Recovery System (ACRS), which revolutionized the tax treatment of depreciation in an attempt to boost capital accumulation and economic growth.
http://www.taxfoundation.org/news/show/163.html
http://www.hillsdale.edu/news/imprimis.asp
Do We Need a New New Deal?
Burton W. Folsom, Jr.
Charles F. Kline Chair in History and Management, Hillsdale College
Author, New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America
The following is adapted from a speech delivered on January 9, 2009, in Washington, D.C., at a seminar sponsored by Hillsdale's Allan P. Kirby, Jr. Center for Constitutional Studies and Citizenship.
THE NEW Deal has probably been the greatest political force in America during the last 100 years, and Franklin D. Roosevelt has probably been the most influential president during this time. In our current economic crisis"which some have compared with the Great Depression"many critics are calling for more federal programs and a "New New Deal." There are three reasons we do not need a New New Deal from President Obama in 2009.
First, the federal programs in FDR's New Deal did not lower unemployment. Sure, the Works Progress Administration built roads, the Tennessee Valley Authority built dams, and the Civilian Conservation Corps planted trees. But every dollar that went to creating a federal job had to come from taxpayers, who, by sending their cash to Washington, lost the chance to buy hamburgers, movie tickets, or clothes and create new jobs for restaurants, theaters, and tailors.
What's worse, some New Deal programs had terrible unintended consequences. The Agricultural Adjustment Administration, for example, overhauled agriculture by paying farmers not to produce on part of their land. After farmers took the federal dollars, the U.S. developed shortages of the very crops taxpayers were paying farmers not to produce. By 1935, for example, the U.S. was importing almost 35 million bushels of corn, 13 million bushels of wheat, and 36 million pounds of cotton. Simultaneously, we had an army of bureaucrats in the Department of Agriculture to inspect farms (and even to do aerial photography) to ensure farmers were not growing the crops we were importing into the country.
Second, the taxes to pay for the New Deal became astronomical. In 1935, Roosevelt decided to raise the marginal tax rate on top incomes to 79 percent. Later he raised it to 90 percent. These confiscatory rates discouraged entrepreneurs from investing, which prolonged the Great Depression.
Henry Morgenthau, FDR's loyal Secretary of the Treasury, was frustrated at the persistence of double-digit unemployment throughout the 1930s. In May 1939, with unemployment at 20 percent, he exploded at the failed New Deal programs. "We have tried spending money," Morgenthau noted. "We are spending more than we have ever spent before and it does not work. . . . We have never made good on our promises. . . . I say after eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!"
Third, the New Deal divided and politicized the country in tragic ways. Those who lobbied most effectively won subsidies and bailouts even if their cause was weak. Others, who had greater needs, received nothing. Walter Waters, who led a march of veterans on Washington, lobbied successfully for a special bonus for veterans, whether they had been in battle or not. When asked why veterans"instead of longshoremen or teachers"should receive a special bonus of taxpayer dollars, he said, "I noticed, too, that the highly organized lobbies in Washington for special industries were producing results: loans were being granted to their special interests. . . . Personal lobbying paid, regardless of the justice or injustice of their demand."
Thus, as money became available, those with effective political lobbies won the subsidies and others, who sometimes had more just causes and greater need, received little or nothing. In the case of the veterans, in 1936 they won a $2 billion federal bonus"a sum exceeding six percent of the entire national debt at the time. Teachers, by contrast, were less effective lobbyists and won almost no federal subsidies. Silver miners, led by Senator Key Pittman of Nevada, won a silver subsidy that paid almost $300,000 a day each day for 14 years, but coal miners were left out.
In another example, under Presidents Hoover and Roosevelt, Illinois lobbied effectively and won $55,443,721 under the first federal welfare grant while Massachusetts received zero federal dollars. Without federal money for welfare needs, Massachusetts valiantly raised its own funds to secure what Illinois extracted from Washington. The Boston Civic Symphony repeatedly gave concerts to benefit the jobless. City officials and teachers raised money and took pay cuts. Massachusetts Governor Joseph Ely believed that no state should receive federal aid and that private charity was the best charity; that federal relief ruined both taxpayers and those in need. "Whatever the justification for relief," Ely said, "the fact remains that the way in which it has been used makes it the greatest political asset on the practical side of party politics ever held by an administration." Ely added that "millions of men and women . . . have come to believe almost that there is no hope for them except upon a government payroll."
Federal dollars always become political dollars, and the Democrats moved to use federal money to gain votes at election time. In Pennsylvania, Joseph Guffey, the successful Democratic candidate for U.S. Senate in 1934, ran a campaign ad that said, "Compare this $297,942,173 contributed by Pennsylvania to the U.S. U.S. Treasury with the cash and credit of $678,074,195 contributed to Pennsylvania by the Roosevelt Democratic administration." Vote Democrat, Guffey and others proclaimed, and the federal faucet will keep running. James Doherty, a New Hampshire Democrat, said, "It is my personal belief that to the victor belong the spoils and that Democrats should be holding most of these [WPA] positions so that we might strengthen our fences for the 1940 election." One WPA director in New Jersey"a corrupt but candid man"answered his office phone, "Democratic Headquarters."
If history is a guide, we have every reason to believe that if President Obama institutes a New New Deal, then universal health care, federal bailouts, and jobs stimulus programs will be costly, will be politicized, and will fail.
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. From that moment on, the majority always votes for the candidates promising the most money from the public treasury, with the result that democracy always collapses over loose fiscal policy followed by a dictatorship. The average of the world's greatest civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependency, and from dependency back to bondage."
Cyclop says he won't count any information previously posted that he never read or has forgotten, but he has given me permission to offer my own arguments. Big of him isn't it?
Here's a few more facts and figures of that era and a bit of tax history:
posted a day or two ago
Quote:1981 599.3 First year of Reagan Administration
1982 617.8
1983 600.6
1984 666.5
1985 734.1
1986 769.2
1987 854.4
1988 909.3 Last year of Reagan Administration
Difference between 1st & last year
310.60 or avg growth of 38.83 per year
(in billions of dollars)
1993 1,154 (First year of Clinton's term)
1994 1,258 +104
1995 1,351 +93
1996 1,453 +102
1997 1,579 +126
1998 1,722 +143
1999 1,827 +105
2000 2,025 +198
Total difference between first and last year - 871 billion, almost triple Reagan's growth in revenues
Average growth per year - 108.875, more than triple Reagan's average growth per year.
