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Saturday, November 03, 2012 3:12:13 AM
wall_street61 - Supply-side Spin - June 11, 2007
Sen. John McCain has said President Bush's tax cuts have increased
federal revenues. But revenues would have been even higher without them.
Summary
Republican presidential candidate Sen. John McCain has said that the major tax cuts passed in 2001 and 2003 have
"increased revenues." He also said that tax cuts in general increase revenues. That’s highly misleading.
In fact, the last half-dozen years have shown us that we can't have both lower taxes and fatter government coffers. The Congressional Budget Office, the Treasury Department, the Joint Committee on Taxation, the White House’s Council of Economic Advisers and a former Bush administration economist all say that tax cuts lead to revenues that are lower than they otherwise would have been – even if they spur some economic growth. And federal revenues actually declined at the beginning of this decade before rebounding. The growth in the past three years that McCain refers to brings revenues back in line with the 40-year historical average as a percentage of gross domestic product.
It’s unclear how much of the growth can be attributed to the tax cuts. Capital gains tax receipts did increase greatly from 2003 to 2006, but the CBO estimates that they will level off and decrease in the next few years. The growth overwhelmingly resulted from a sharp rise in corporate tax receipts, the cause of which is a topic of debate.
[...]
“Federal revenue is lower today than it would have been without the tax cuts,” Alan D. Viard of the conservative American Enterprise Institute told the Washington Post last October. Viard, who worked in the Treasury Department’s Office of Tax Analysis and the White House’s Council of Economic Advisers under President Bush, told FactCheck.org that “nobody can absolutely prove that.” Proof would require time travel and a reversal of tax policy. “But among economists, there’s no dispute.”
Tax cuts can be a sound economic move that spurs growth, says Viard. “But it doesn’t mean that [the cuts] gained revenue."
If the government had reined in spending – as McCain wanted – the senator might have more to brag about. Viard says economists would expect a boost to the economy if tax relief had been matched by spending cuts. When the cuts are deficit-financed (as these are), it’s still possible to have positive growth, he continues, but that’s a different matter from saying there’s a net increase.
“I found Sen. McCain’s statement rather disappointing on this matter,” he says, referring to the GOP debate.
[...]
Federal revenue normally increases every year. In fact, revenues have declined in only five years since 1962. The 35 percent growth between 2003 and 2006 is significant – the last major growth in revenue was between 1997 and 2000, when the economy was booming and federal receipts rose 28.2 percent. But the recent three-year period also comes after three years of decreases, a drop Viard attributes to the 2001 tax cuts and the start of a recession that same year.
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Source: Congressional Budget Office, “Historical Budget Data”
http://www.cbo.gov/ftpdoc.cfm?index=7731&type=0&sequence=0
more .. http://www.factcheck.org/taxes/supply-side_spin.html
.. am so late on yours just because i was looking for one on the R-R budget
and bumped into it .. then thought, oh well.. this one might be useful for you ..
Sen. John McCain has said President Bush's tax cuts have increased
federal revenues. But revenues would have been even higher without them.
Summary
Republican presidential candidate Sen. John McCain has said that the major tax cuts passed in 2001 and 2003 have
"increased revenues." He also said that tax cuts in general increase revenues. That’s highly misleading.
In fact, the last half-dozen years have shown us that we can't have both lower taxes and fatter government coffers. The Congressional Budget Office, the Treasury Department, the Joint Committee on Taxation, the White House’s Council of Economic Advisers and a former Bush administration economist all say that tax cuts lead to revenues that are lower than they otherwise would have been – even if they spur some economic growth. And federal revenues actually declined at the beginning of this decade before rebounding. The growth in the past three years that McCain refers to brings revenues back in line with the 40-year historical average as a percentage of gross domestic product.
It’s unclear how much of the growth can be attributed to the tax cuts. Capital gains tax receipts did increase greatly from 2003 to 2006, but the CBO estimates that they will level off and decrease in the next few years. The growth overwhelmingly resulted from a sharp rise in corporate tax receipts, the cause of which is a topic of debate.
[...]
“Federal revenue is lower today than it would have been without the tax cuts,” Alan D. Viard of the conservative American Enterprise Institute told the Washington Post last October. Viard, who worked in the Treasury Department’s Office of Tax Analysis and the White House’s Council of Economic Advisers under President Bush, told FactCheck.org that “nobody can absolutely prove that.” Proof would require time travel and a reversal of tax policy. “But among economists, there’s no dispute.”
Tax cuts can be a sound economic move that spurs growth, says Viard. “But it doesn’t mean that [the cuts] gained revenue."
If the government had reined in spending – as McCain wanted – the senator might have more to brag about. Viard says economists would expect a boost to the economy if tax relief had been matched by spending cuts. When the cuts are deficit-financed (as these are), it’s still possible to have positive growth, he continues, but that’s a different matter from saying there’s a net increase.
“I found Sen. McCain’s statement rather disappointing on this matter,” he says, referring to the GOP debate.
[...]
Federal revenue normally increases every year. In fact, revenues have declined in only five years since 1962. The 35 percent growth between 2003 and 2006 is significant – the last major growth in revenue was between 1997 and 2000, when the economy was booming and federal receipts rose 28.2 percent. But the recent three-year period also comes after three years of decreases, a drop Viard attributes to the 2001 tax cuts and the start of a recession that same year.
.jpg)
Source: Congressional Budget Office, “Historical Budget Data”
http://www.cbo.gov/ftpdoc.cfm?index=7731&type=0&sequence=0
more .. http://www.factcheck.org/taxes/supply-side_spin.html
.. am so late on yours just because i was looking for one on the R-R budget
and bumped into it .. then thought, oh well.. this one might be useful for you ..
It was Plato who said, “He, O men, is the wisest, who like Socrates, knows that his wisdom is in truth worth nothing”
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