Monday, June 13, 2005

The Last "Laff" & Voodoo Economics: Bush Tax _CUTS_ Produce _MORE_ Revenue

Remember all the whining about Bush's tax cuts? How the Democrats have said we are creating a huge deficit problem, effectively shackling our children into tax slavery? Yes, LOL. Well, the last "laugh" as in the "Laffer Curve." Basically, the Laffer Curve predicts that there is an optimal taxation level to maximize tax revenue; i.e. if you make the tax rate too high, you will create a disincentive for individuals and companies to earn additional revenue. Liberals laughed this to scorn...calling it "voodoo" economics.

However, the 1980s and the economic growth we experienced due to Reagon/Bush (41') tax policies prove this out. Recent results on the Bush (43') tax cuts reinforce this.

Reagan cut the top income tax rate from 70% to 28%. The result? Tax revenue doubled; from $517 to $1,032 billion dollars.

Bush (43') cut reduced dividend and capital gains tax rates to 15%. The result? According to the CBO (mostly non-partisan; and certainly not overly friendly to the Administration):

Federal tax revenues have increased by $187 billion so far this fiscal year alone, a 15.4% increase in federal tax receits vis-a-vis 2004. Individual and corporate tax rates have increased (overall) 30% since the tax cuts went into effect. Net result? Lower tax rates, but _MORE_ tax dollars. You know that something is going well when perpetually bankrupt New York City goes from red ink to $3 billion in the black.

Do we still have a deficit? Yes, because power corrupts and the GOP has gone from being a small government party to the party of Pork; just like the Democrats before them. However, that doesn't cut against the effectiveness of President Bush's tax policies.

Where is your black magic now my lefty friends? It certainly doesn't like in increasing taxes; so please, leave your "progressive" tax increase proposals in fantasyland; cuz they only produce fake monopoly money; not real federal revenue.

2 Comments:

Blogger Chris Williams said...

Lyle:

New York City hasn't been on the brink of bankruptcy since the 1970s. Hardly a perpetual problem.

Also, a one year increase in tax collections does not a trend make or a Laffer Curve prove.

10:38 AM  
Blogger W. Lyle Stamps said...

Chris:

Good point...re: 1 year of data;

however:

the fact that the economy rebounded after tax cuts in the 80s and again now after Bush's tax cuts creates at least the illusion, if not the actual fact, of increased revenue.

also, NYC had bankruptcy problems into the early 80s and while not bankrupt, has borrowed heavily since then...at least that was my understanding, in part from:

http://www.cbsnews.com/stories/2003/04/12/national/main549073.shtml

12:56 PM  

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