| Kasz216 said: Uh... what about that 19.5 graph that's show tax revenue consistant with GDP? Aside from what you've stated... none of that has anything to do with a progressive vs flat tax arguement. Nor does it explain why we don't even have a proportional tax system... but instead a "pick and choose" style taxation system that leads to abuse. All programs should be paid for by all people. Taxes shouldn't be raised on some to get new programs in play. When new taxation is needed everyone should feel the hit in some form or another. If they can't. Well the government is spending way too much money. |
I don't buy that graph for various reasons. One of them has to do with government deficits spiking during the Reagan years and progressively getting worse, absent some years of surpluses in the Clinton years. And frankly when adjusted for inflation government budgets have not grown to that degree, even though you love to hear people piss and moan about government spending. If you compare the budget now to 1970 and adjust for inflation, the budget is about at the same level. But deficits have skyrocketed.
Furthermore, if you look at real revenue growth for the government during different administrations, real revenue growth is higher when taxes on the rich are higher, in spite of what many claim. This article explains it relatively well.
http://krugman.blogs.nytimes.com/2008/01/17/reagan-and-revenue/
Reagan and revenue
Ah - commenter Tom says, in response to my post on taxes and revenues:
Taxes were cut at the beginning of the Reagan administration.
Federal tax receipts increased by 50% by the end of the Reagan Administration.
Although correlation does not prove causation the tax cut must have accounted for some portion of this increase in federal tax receipts.
I couldn’t have asked for a better example of why it’s important to correct for inflation and population growth, both of which tend to make revenues grow regardless of tax policy.
Actually, federal revenues rose 80 percent in dollar terms from 1980 to 1988. And numbers like that (sometimes they play with the dates) are thrown around by Reagan hagiographers all the time.
But real revenues per capita grew only 19 percent over the same period — better than the likely Bush performance, but still nothing exciting. In fact, it’s less than revenue growth in the period 1972-1980 (24 percent) and much less than the amazing 41 percent gain from 1992 to 2000.
Is it really possible that all the triumphant declarations that the Reagan tax cuts led to a revenue boom — declarations that you see in highly respectable places — are based on nothing but a failure to make the most elementary corrections for inflation and population growth? Yes, it is. I know we’re supposed to pretend that we’re having a serious discussion in this country; but the truth is that we aren’t.
Update: For the econowonks out there: business cycles are an issue here — revenue growth from trough to peak will look better than the reverse. Unfortunately, business cycles don’t correspond to administrations. But looking at revenue changes peak to peak is still revealing. So here’s the annual rate of growth of real revenue per capita over some cycles:
1973-1979: 2.7%
1979-1990: 1.8%
1990-2000: 3.2%
2000-2007 (probable peak): approximately zero
Do you see the revenue booms from the Reagan and Bush tax cuts? Me neither.
We had two bags of grass, seventy-five pellets of mescaline, five sheets of high-powered blotter acid, a salt shaker half full of cocaine, a whole galaxy of multi-colored uppers, downers, screamers, laughers…Also a quart of tequila, a quart of rum, a case of beer, a pint of raw ether and two dozen amyls. The only thing that really worried me was the ether. There is nothing in the world more helpless and irresponsible and depraved than a man in the depths of an ether binge. –Raoul Duke
It is hard to shed anything but crocodile tears over White House speechwriter Patrick Buchanan's tragic analysis of the Nixon debacle. "It's like Sisyphus," he said. "We rolled the rock all the way up the mountain...and it rolled right back down on us...." Neither Sisyphus nor the commander of the Light Brigade nor Pat Buchanan had the time or any real inclination to question what they were doing...a martyr, to the bitter end, to a "flawed" cause and a narrow, atavistic concept of conservative politics that has done more damage to itself and the country in less than six years than its liberal enemies could have done in two or three decades. -Hunter S. Thompson
