The USD will fall further since the interest rate is expected to fall again in Nov.

I was trying to remember where I heard of Laffer till Final-Fan mentioned Supply-side. Now correct me if I'm wrong but the Reaganomics theory was that if you cut taxes for the rich (not the poor as because the breaks they'll get back will be too small to matter), they will use the extra money to invest-therefore creating new taxable jobs which will make up for loss revenue. Unfortunately, what Reagan, and Laffer, found out that with the extra income, wealthy Americans merely bought more luxuries, BMWs, Perriere, i.e., a lot of imports instead of actually investing. What the US got in the 80s was merely a reduction in social services. So I think Laffer is discredited in his theory, kinda like Hoover's trickle down plan. Really, giving wealthy people more disposable income just shifts the economy in luxury buying-but doesn't really improve it the way you want it to.

I blame the retard in the white house.

The US dollar won't stop falling until the treasury stops printing money (and devaluing the currency in the process) to help pay for the war in Iraq.

the dollar will continue to fall so long as federal reserve continues to print money out of thin air

@Final-Fan A "tax cut" occurs when a government "cuts" taxes, that is, "reduces in amount" (M-W again) the "taxes" ("a sum levied on members of an organization (e.g. the government) to defray expenses") that it takes in (i.e. "tax revenue").

Hey, there's no need up the rhetoric here. I do understand the words you're typing. I am going to assume that you're using non-standard definitions of tax rate and tax revenue, because otherwise there is no possible tautology. Let me clarify my definitions:

tax base, B(t): a revenue stream that the government taxes. I am explicitly stating that it is a function of the tax rate to avoid confusion with an argument below.

tax rate, t: the proportion that of a tax base that the government taxes. Usually this refers specifically to the highest marginal tax rate on income a wage earner faces, but it could also refer to average tax rate or corporate tax rate, etc.

tax revenue, T: the amount of revenue a government generates from a tax. This number should be equal to the times the tax base, or

(1) T = t * B(t).

The government has no direct control of the tax revenue, it can only control the tax rate. Thus when we say the government cuts taxes, we mean that it is lower the tax rate for some group.

You are making the assumption that a higher tax rate, t, implies higher tax revenue, T. As we can see from the equation (1), this would be true if you make the assumption that the tax rate has no effect on the tax base, B.

However, there is no reason to assume that this is the case, and if you make that assumption you must certainly justify it. Therefore it is not a tautology; it is possible that in some ranges of t and for some economies decreasing the tax rate would actually increase the tax revenue. However unlikely you may find this scenario, the possibility that it exists means that it is not a tautology.

Most people will agree that B(t) is likely to be a decreasing function of t for most of the domain of the function, but that its exact behavior is difficult to describe/ascertain. If you want to discuss this further, I'd be happy to do so in private messages.

@Final-Fan "Also, your use of the Laffer curve implies that you support "supply-side" economic theory, which no leading economist takes seriously, and which Reagan tried to utilize to no apparent effect."

Bringing up an economic concept doesn't mean that I support it. I merely said that this is the intuition behind the concept of the Laffer curve, not that it was correct or an absolute law of economics. Many economists discuss the assumptions behind the Laffer curve and other simple economic models; simply talking about them doesn't automatically mean that they ardently adhere to a specific dogma.

I haven't responded to the rest of your comments for several reason. The first is that I haven't had time the time to give them a decent reading, the second is that I'm not entirely certain I want to co-opt this thread, and the third is that I don't think we can have a coherent discussion on the topic if you do not agree that "higher taxes = higher tax revenue in all cases" is a fundamentally flawed argument.

Well, the US dollar is falling for two reasons. The first is the fault of the US, but the second is just a general trend and nothing to worry about.

First, this country is losing its competitive edge in world markets, because we spend too damn much on war (close to $770 billion a year, when you count everything up, including supplemental bills, nuclear weapons, foreign military aid, veterans payments, etc.), and not enough on industry, science and education. Unnecessary military spending and stupid imperial wars are what destroyed the Soviet Union, and we're following the same path of self-destruction. Declining economies end up with declining currencies, period.

Second, the rest of the world is industrializing and getting richer. That's nothing to worry about, it just means that China, Russia and other economies are growing fast and will be able to buy more stuff from us, which helps our economy.

What's worrisome isn't the US dollar per se, it's the US current account deficit. The US is borrowing waaaaay too much money from foreign creditors, at some point the bills will come due and we're going to have to retrench.

I freely concede that, at extremely high levels of taxation, increased taxation ultimately causes economic repression that erases the revenue increase. However:
-- 1) I would argue that we are nowhere near that level, and that, therefore, for the purpose of discussing taxes in the present-day United States my statement is a tautology.
-- 2) The statement you attribute to me is not what I said! I think it's notable that the statement you attributed to me was in fact the inverse of what I actually said.

I said that LOWER tax rates, by definition, lower tax revenue. You may say that you are in favor of lowering tax rates in the hope that, eventually, your tax-cutting will increase the tax base so much that more revenue will be generated at the lower rate. But this is a long range plan. Timmah!'s argument -- which my statement was in response to -- was that in the six years since Bush's tax cuts went into effect, they have already more than paid for themselves. This is ridiculous and contrary to known facts. In the short term, my statement is a tautology.

Also, even if that gambit worked -- which it has not, nor will it -- there is still the matter of the damage done in the interim; that is, the massive debt.

P.S.  I do apologize for mistaking you for a supply-side proponent; and I respect that you may not want to spend that kind of time on this thread; however, as for taking it over, I think Timmah!, myself, and you have already done that.  

"The primary result of tax cuts is decreased tax revenue."

Let us explore my alleged tautology in more depth. I shall use your definition of "tax cut".

0) There exists a tax base paying a certain tax rate, creating tax revenue. Tb * Tr = Tv'
1) A drop in the rate of taxes to an existing tax base causes a drop in tax revenue. T(r-x) * Tb = Tv''
2) The lower tax rate encourages greater production and investment.
3) Greater production and investment creates greater wealth, and thus a greater tax base. T(r-x) * T(b+y) = Tv'''
4) You say that the increase in tax base will overcome the decrease in tax rate to create greater tax revenue than would otherwise have existed. Tv''' > Tv' (assuming an otherwise static universe)

(1) is the primary [edit] result of the tax cut. (2) [edit] is secondary; (3) is an indirect result, as is (4) if it happens at all.

Therefore, my statement has not yet been shown to be not a tautology.

P.S. I also want to apologize for my earlier tone. I would not regret speaking to Timmah!'s ilk that way, but you were undeserving of that scorn.

P.P.S.  Just to be completely clear, the fact that (2) is secondary does not necessarily speak to its importance in the view of the tax cutter.  It is secondary in the way that the creation of a vacant lot is a secondary result of demolishing the building that was on that lot.  (The first result, of course, is that the building is now a pile of rubble.)