Where is the US economy headed?

There are some problems with your assessment pstewart

Yes the market is cyclical and goes up over time but then you proceed to claim the reason it goes up is cutting taxes.

I must agree with parados, tax rates have little or nothing to do with the stock market.

parados wrote:

There are some problems with your assessment pstewart

Yes the market is cyclical and goes up over time but then you proceed to claim the reason it goes up is cutting taxes.

Uhhh... no, I didn't say that. The stock market is an entity unto itself, filled both with gamblers and safer mutual funds. And it, too, is cyclical, just as the economy is cyclical, but their cycles don't necessarily MATCH UP. I was speaking of the economy in general, and just tossing out some facts about how it works. What I DID claim is that lower taxes create more, not less, tax revenue for the govt, and vice versa. Nothing there about the stock market.

parados is correct; basically it's about the economy that determines tax revenue, not the tax rates.

cicerone imposter wrote:

parados is correct; basically it's about the economy that determines tax revenue, not the tax rates.

Exactly! When the economy grows, tax revenue grows. And decreasing taxes creates more expansion and more production and more jobs and more consumer spending. Sure sounds like a growing economy to me, which means more tax revenue. That's what happened the last few years since the tax cuts, and it makes perfect sense.

cicerone imposter wrote:

parados is correct; basically it's about the economy that determines tax revenue, not the tax rates.

Exactly! When the economy grows, tax revenue grows. And decreasing taxes creates more expansion and more production and more jobs and more consumer spending. Sure sounds like a growing economy to me, which means more tax revenue. That's what happened the last few years since the tax cuts, and it makes perfect sense.

cicerone imposter wrote:

parados is correct; basically it's about the economy that determines tax revenue, not the tax rates.

Exactly! When the economy grows, tax revenue grows. And decreasing taxes creates more expansion and more production and more jobs and more consumer spending. Sure sounds like a growing economy to me, which means more tax revenue. That's what happened the last few years since the tax cuts, and it makes perfect sense.

In theory perhaps, but not in practice.

okie: They are blind to the fact that 100% tax rates will reduce tax revenues.

Only an ignoramus would write such a dumb statement.

pstewart wrote:

cicerone imposter wrote:

parados is correct; basically it's about the economy that determines tax revenue, not the tax rates.

Exactly! When the economy grows, tax revenue grows. And decreasing taxes creates more expansion and more production and more jobs and more consumer spending. Sure sounds like a growing economy to me, which means more tax revenue. That's what happened the last few years since the tax cuts, and it makes perfect sense.

pstewart, you will never convince parados, cylcops, and imposter. They are blind to the fact that 100% tax rates will reduce tax revenues. This whole argument centers around a curve, not an exact curve, but a concept called the Laffer Curve, which obviously has to exist by definition, and it is obvious by understanding simple mathematics and free market economics, but they will never recognize the existence of such a curve because it dispels their whole theory of how they want government to work, which includes taking a larger and larger bite out of every working man and woman's paycheck to support their pet government "take care of everybody" programs.

I think many economists believe the Kennedy tax rate cuts increased revenues over what they would have increased otherwise, and the same is true with the Reagan tax rate cuts. Of course we have debated this extensively and liberals that favor high rates simply won't agree with it. And the problem is we cannot go back and redo history with the exact same set of economic circumstances with different tax rates to see how they would compare, can we?

So, I think those examples are clear evidence. I am sorry you don't choose to see the same effects that appear to be very clearly demonstrated, especially with the Kennedy tax cuts.

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.

The Consolidated Omnibus Budget Reconciliation Act of 1985 raised taxes yet again. Even the Tax Reform Act of 1986, which was designed to be revenue-neutral, contained a net tax increase in its first 2 years. And the Omnibus Budget Reconciliation Act of 1987 raised taxes still more.

The year 1988 appears to be the only year of the Reagan presidency, other than the first, in which taxes were not raised legislatively.