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Forums - Politics Discussion - How the US Government Buys Votes

kanageddaamen said:
HappySqurriel said:

 

 

Tax revenues have remained fairly consistent regardless of tax rates, while spending has steadily climbed. The high deficits are a result of irresponsible spending and cannot be resolved by increasing taxes because, as we have seen over several decades, increasing tax rates will not result in increased tax revenue.

And please, don't talk to me about reality.  I just checked your sources and you are comparing TOTAL government spending (State, local, federal) against FEDERAL tax revenues.

I love how the right wing, when their theories don't hold, fudge facts to make it look like they do.

According to the actual numbers, the FEDERAL percentage of GDP spending (you know, what we are actually talking about) ihas been fairly steady for the last 40 years (in fact it is lower now than under Reagan)

 

When you try to fudge things like this, all you do is shine a light on your hypocracy


First off, its spelled "Hypocrisy" 

Beyond that, if tax rates have changed dramatically over the years and revenues have not changed significantly in response to that (and most of the variability in tax revenue relates to economic output) what does that tell you about the effectiveness of tax increases at increasing tax revenue?

Since you wanted the Federal chart:

 

As you can see the same pattern emerges ...

If it was tax-cuts that were leading to deficits, wouldn't you expect to see tax revenue falling while government spending stayed stable? Being that the complete opposite pattern exists what does that tell you about your theory?

 



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kanageddaamen said:
HappySqurriel said:
kanageddaamen said:
The solution is simple. Stop having unfunded tax cuts.

There is a republican strategy (which works VERY well) called "strategic deficits." The idea is basically:

Cut taxes, claiming that it will spur the economy, and putting an "expiration date" on them
The tax cuts will not do what they is claimed they will (increase GDP thereby increasing tax revenue) but instead they will create a huge budget deficit
Use that budget deficit to claim a budget crisis and leverage spending cuts to shrink the government (except defense of course)
When the tax cuts reach their expiration, claim that letting them expire is raising taxes, and that they should be made permanent

This is EXACTLY what is going on now and has been going on since 1980 when Reagan took office. Look at the national debt figures.

The one exception was during the Clinton era when there were moderate tax increases to ensure a balanced budget.

So the solution is easy. Since wealth individual tax cuts DON'T create jobs, nor do they increase GDP, we let the Bush era tax cuts expire, as they should have, and kick up tax receipts.

Give a federal tax CREDIT for all individuals' state taxes spent (up to $2000), encouraging middle class spending, the driving force of the economy, and job creation.

Create a 0% tax bracket for capital gains on investments held 20+ years (retirement funds and the like)
Have a 15% bracket on capital gains on investments of 10-20 years
and have all other capital gains taxed as income.

Cut waste from the defense budget and close many overseas bases.

place income requirements on medicare

Once the budget is balanced, and the debt has largely been repaid, use a surplus to fund tax cuts.

here is also an aside as to why cutting wealthy individuals/corporate taxes does not create jobs:

The SOLE job of a corporation is to make money for its shareholders. Every action it undertakes MUST be to this end, otherwise the corporation is not doing its job and management of that corporation should be changed.

Therefore, a corporation will ONLY create a job if it contributes to the net profits of the corporation. If a job will not increase profits, the corporation MUST NOT create that job.

On the flip side, if a job WILL increase profits (regardless of how much those profits are taxed, or the degree to which the job will increase profits) the corporation MUST create the job (with priority set to the jobs that will create the most profit)

Therefore, job creation is driven by gross profits, not net profits, and the tax rate (as long as it is not 100%) should not impede the hiring of employees.

It is the corporations responsibility to find capital, either by borrowing, from cash on the books, or from new investors, to make all of the profit driving hires.

So when does a job create profit for the company? Simple, if the company is not meeting demand for the product, jobs that will increase supply will increase profits. If a company is not meeting demand, there is much more limited opportunity for job creation, limited to only jobs that MAY spur demand (marketing and such, which is usually from outside firms any way)

So, the only way to increase jobs is to increase gross profits (which are unaffected by tax rates) and the surest way to increase gross profit driving jobs is to spur demand.

In this way, they government should adopt policies that focus foremost on increasing the size and spending and investment power of the middle class, as well as making sure lending is accessible to corporations that need it.

Increasing the spending and investment power of the upper class does not drive demand in the same way the middle class does, nor does increasing corporate net profits increase hiring.


The problem with that "theory" is that it is not based in reality:

 

 

Tax revenues have remained fairly consistent regardless of tax rates, while spending has steadily climbed. The high deficits are a result of irresponsible spending and cannot be resolved by increasing taxes because, as we have seen over several decades, increasing tax rates will not result in increased tax revenue.


But your graphs show they do, as long as the increases are not punitive.  Look at the tax revenue increase in the 90s, when there were moderate tax increases, and look at them plummit after the bush tax cuts and obama tax cuts which have not contributed to GDP growth, most notably the income tax revenue dropping nearly 50% from the the late 90s until now, when taxes are at historical lows.

You are also framing the tax revenue as percentage of GDP, which make it seem as if they are "holding steady" when in reality a 5% swing is massive in real dollars.

 

and since we are talking about income and corporate tax rates, everything else in that graph is noise that muddies the issue.


In the short run (a few years) tax revenues may be impacted by tax rates, but they trend towards the average as the increase/decrease in money in the economy has its impact on spending and investment.

Lower corporate and income taxes lead to greater economic growth and higher wages, which translate into higher tax revenues; higher corporate and personal income taxes lead to lower economic growth and lower wages, which translate into lower tax revenues.



HappySqurriel said:


In the short run (a few years) tax revenues may be impacted by tax rates, but they trend towards the average as the increase/decrease in money in the economy has its impact on spending and investment.

Lower corporate and income taxes lead to greater economic growth and higher wages, which translate into higher tax revenues; higher corporate and personal income taxes lead to lower economic growth and lower wages, which translate into lower tax revenues.

That is what I am talking about, a few years of going back to the 90s tax rate levels, as well as taxing income AS income , combined with intelligent spending cuts to defense and medicare, to create a surplus and payoff debt (reducing long term spending in debt interest) then FUND tax cuts with surplus revenue.

The debt and deficit issue cannot be fixed by spending cuts alone.

And lower tax rates do not equate to economic growth:



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HappySqurriel said:
kanageddaamen said:
HappySqurriel said:

 

 


First off, its spelled "Hypocrisy" 

Beyond that, if tax rates have changed dramatically over the years and revenues have not changed significantly in response to that (and most of the variability in tax revenue relates to economic output) what does that tell you about the effectiveness of tax increases at increasing tax revenue?

Since you wanted the Federal chart:

 

As you can see the same pattern emerges ...

If it was tax-cuts that were leading to deficits, wouldn't you expect to see tax revenue falling while government spending stayed stable? Being that the complete opposite pattern exists what does that tell you about your theory?

 

Give me a break, it is nearly 1 AM here and I am exhausted, how does attacking spelling forward any sort of point on the issue.

Let's use the same data format shall we, as going back 250 years is sure to skew the results:

And part of the big 2009 jump can be attributed to a nearly $500 billion reduction in GDP from the recession.

As you can see, there has not been a significant spending increase in really the last 30 years.



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mrstickball said:
SvennoJ said:

Yeah get rid of social security and health care, see how that works out.

Sure there are people that try to abuse the system, but it's not just there for entitlement. Free healthcare for all might actually be cheaper in the long run. Saves a hell of a lot of paperwork, and people don't postpone until it becomes an emergency.

How come corporate income tax is only 5%? Are there so few American based companies left?


You do realize that Brazil (home of that picture) is a heavy regulated leftist state, right? Free health care in America wouldn't be cheaper. We have far deeper, systemic problems that drive up the cost of care that would still be there even if we had a universal-type health care system.

Yes, and as far as I'm aware the heavily regulated leftist state is working to solve the problem and slowly making progress since 2003. Anyway besides the point, it was simply an illustration of what can happen without the government working to redistribute wealth.

You're right that simply changing to free health care in the USA would not solve the underlying problems. Cutting medicare spending won't solve them either, it would only help with the budget short term. Slow reform is the only option, something that's not a popular sell nowadays.



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And don't get me wrong, I don't think that the problem can solved by tax "increases" (ie, letting temporary tax cuts expire that are SUPPOSED to expire) Cuts need to be made in spending too, but not just from entitlements (really Social Security doesn't need to be touched at all, medicare and defense should be the first targets)

But the key to both long term growth and responsible budgeting is in the growth and increase spending and investment power of the middle class, which will not happen by reducing rich people's taxes.



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kanageddaamen said:
HappySqurriel said:


In the short run (a few years) tax revenues may be impacted by tax rates, but they trend towards the average as the increase/decrease in money in the economy has its impact on spending and investment.

Lower corporate and income taxes lead to greater economic growth and higher wages, which translate into higher tax revenues; higher corporate and personal income taxes lead to lower economic growth and lower wages, which translate into lower tax revenues.

That is what I am talking about, a few years of going back to the 90s tax rate levels, as well as taxing income AS income , combined with intelligent spending cuts to defense and medicare, to create a surplus and payoff debt (reducing long term spending in debt interest) then FUND tax cuts with surplus revenue.

The debt and deficit issue cannot be fixed by spending cuts alone.

And lower tax rates do not equate to economic growth:

The tax cuts within the United States did not translate into significant economic growth because they weren't the right taxes to cut (the corporate tax rate in the United States is remarkably punitive), there was a massive increase in regulatory burden which cancelled out any benefits from the tax cuts, and the rapid (uncontrolled) growth in the government crowded out growth in the private sector. To make matters worse, the United States has experienced substantial economic pressures for decades that have been poorly responded to which have acted as a drag on economic growth; primarily, the issue is that goods and services made in the United States are becoming increasingly uncompetitive and pseudo-governmental bodies have responded by ensuring cheap consumer credit to drive economic growth through consumption.

The problems in the United States obviously cannot be solved by cutting spending alone, but spending cuts much more dramatic than the ones you've listed are needed (the federal government needs to cut over $1 trillion), tax revenues should be increased by eliminating deductions and simplifying the tax code, a major regulatory overhaul is needed, the federal reserve needs to stop manipulating interest rates to create artificial growth, all pseudo-governmental bodies (like Fannie Mae and Freddie Mac) should be closed, the education system needs to be fixed starting by eliminating federal involvement, and there needs to be a cultural shift towards preventative healthcare rather than treatment.

The net result should be a government that has been reduced to a level that can easily be paid for through tax revenues, that has a lightweight but effective regulatory system, has no questionable involvement in the economy (in particular the financial sector), has a simple tax structure that is paid by all citizens, and the health of the nation improves while costs of maintaining that health decline.



HappySqurriel said:
kanageddaamen said:
HappySqurriel said:


In the short run (a few years) tax revenues may be impacted by tax rates, but they trend towards the average as the increase/decrease in money in the economy has its impact on spending and investment.

Lower corporate and income taxes lead to greater economic growth and higher wages, which translate into higher tax revenues; higher corporate and personal income taxes lead to lower economic growth and lower wages, which translate into lower tax revenues.

That is what I am talking about, a few years of going back to the 90s tax rate levels, as well as taxing income AS income , combined with intelligent spending cuts to defense and medicare, to create a surplus and payoff debt (reducing long term spending in debt interest) then FUND tax cuts with surplus revenue.

The debt and deficit issue cannot be fixed by spending cuts alone.

And lower tax rates do not equate to economic growth:

 

The tax cuts within the United States did not translate into significant economic growth because they weren't the right taxes to cut (the corporate tax rate in the United States is remarkably punitive), there was a massive increase in regulatory burden which cancelled out any benefits from the tax cuts, and the rapid (uncontrolled) growth in the government crowded out growth in the private sector. To make matters worse, the United States has experienced substantial economic pressures for decades that have been poorly responded to which have acted as a drag on economic growth; primarily, the issue is that goods and services made in the United States are becoming increasingly uncompetitive and pseudo-governmental bodies have responded by ensuring cheap consumer credit to drive economic growth through consumption.

The problems in the United States obviously cannot be solved by cutting spending alone, but spending cuts much more dramatic than the ones you've listed are needed (the federal government needs to cut over $1 trillion), tax revenues should be increased by eliminating deductions and simplifying the tax code, a major regulatory overhaul is needed, the federal reserve needs to stop manipulating interest rates to create artificial growth, all pseudo-governmental bodies (like Fannie Mae and Freddie Mac) should be closed, the education system needs to be fixed starting by eliminating federal involvement, and there needs to be a cultural shift towards preventative healthcare rather than treatment.

The net result should be a government that has been reduced to a level that can easily be paid for through tax revenues, that has a lightweight but effective regulatory system, has no questionable involvement in the economy (in particular the financial sector), has a simple tax structure that is paid by all citizens, and the health of the nation improves while costs of maintaining that health decline.


Wrong,

Tax cuts did not stimulate the economy because they were not designed to stimulate the economy.  Their intent was to "starve the beast" and it is a well documented political startegy endorsed and practiced by reagan, w. bush, and those currently using it to try to shrink government (Sarah Palin and the tea party folks)

Also, if social security was eliminated today, it would worsen the deficit issue in the country, not improve it.

If anything the last few years should have taught us is that corporate profits do not equate to job creation and economic growth.  The largest employing sectors of the economy are also small businesses, which are NOT hit by any massive regulatory burdens (I should know, I own one,) and the lack of sufficent regulation is what caused the credit default swapping and sale of toxic securities which caused the financial meltdown in late 2008.

The reason US made goods have become uncompetative is largely due to a shrinking middle class, which can no longer afford to play the role the must for a successful capitalism system, which is "voting with their wallet."  With their wallet empty, they have little choice but to buy cheap crap made by slave labor in china.

So your proposal is to increase the tax rates on the lower and middle classes (by eliminating tax deductions, and having people who can't pay for food not pay taxes) and lowering taxes on corporations and the rich?  Certain path towards conomic collapse.  Increased taxes on the consumer classes will decrease consumer spending, decrease hirings, decrease corporate profits, and kill the economy.

I do agree we need a focus on preventative care, but that is impossible when a huge chunk of the population is uninsured, has no preventative care, and can't afford to even go to the doctor for a checkup, opting for urgent care facilities for things that should be handled by a primary physician.

I am a moderate, with the opinion that the government should be reduced in size but must be done so responsibly.  I can see I am wasting my breath as you have drank the right wing cool aide and simply spout conservative talking points widely disproven by actual fatcs and logic.

Time for bed and to bow out of this dead end conversation.



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Anyone else think that the USA should cut its military aid budget significantly?



Lol, no.