« It's all about location, location, location | Main | Yet more proof of the true cost of "free" »

Tax Revenues Jump - Liberal Heads Explode

This one will have heads exploding all over the liberal blogosphere. Of course the media will only mention this once. If Clinton were in office it would be the lead story for a week.

Surprising Jump in Tax Revenues Is Curbing Deficit

WASHINGTON, July 8 -- An unexpectedly steep rise in tax revenues from corporations and the wealthy [What happened to the tax cuts for the rich? -ed] is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.

On Tuesday, White House officials are expected to announce that the tax receipts will be about $250 billion above last year's levels and that the deficit will be about $100 billion less than what they projected six months ago. The rising tide in tax payments has been building for months, but the increased scale is surprising even seasoned budget analysts and making it easier for both the administration and Congress to finesse the big run-up in spending over the past year.

Tax revenues are climbing twice as fast as the administration predicted in February, so fast that the budget deficit could actually decline this year.

The main reason is a big spike in corporate tax receipts, which have nearly tripled since 2003, as well as what appears to be a big increase in individual taxes on stock market profits and executive bonuses.[Gasp! You mean Reagan was right?]

On Friday, the Congressional Budget Office reported that corporate tax receipts for the nine months ending in June hit $250 billion -- nearly 26 percent higher than the same time last year -- and that overall revenues were $206 billion higher than at this point in 2005.

Congressional analysts say the surprise windfall could shrink the deficit this year to $300 billion, from $318 billion in 2005 and an all-time high of $412 billion in 2004.

Time and time and time again we reprove the same lesson. When we lower the tax RATE we collect more REVENUE. Somehow the liberals don't understand this idea when it is as simple looking at your local Walmart.

Walmart, the world's largest discounter, has the lowest PRICES but makes the most MONEY.

But this wouldn't be a New York Times story without the biased spin....

Republicans are already arguing that the revenue jump proves that their tax cuts, especially the 2003 tax cut on stock dividends, would spur the economy and ultimately increase revenues.

"The tax relief we delivered has helped unleash the entrepreneurial spirit of America and kept our economy the envy of the world," President Bush said in his weekly radio address on Saturday.

Democrats and many independent budget analysts note [STOP STOP STOP]

Did you get that spin??? Republicans argue XXX but Democrats AND MANY INDEPENDENT BUDGET ANALYSTS...

As if everyone with a brain knows the Republcians are wrong. -- Of course there are many "independent budget analysts" who will back the Republicans but the Times is all about the spin. They seek to marganize the Republicans' arguements.

But I'll let the spin continue so I can debunk it.

Democrats and many independent budget analysts note that overall revenues have barely climbed back to the levels reached in 2000, and that the government has borrowed trillions of dollars against Social Security surpluses just as the first of the nation's baby boomers are nearing retirement.

HUH? Social Security is now important to Democrats? Since when? For years now all we've heard is that Social Security wasn't a problem. Now, faced with the reality that supply-siders are right, they change the subject? But I digress.

What this story proves, other than the fact that all the Democratic talking points about tax cuts for the rich are just wrong, is that the fastest way for the feds to decrease the deficit is to cut taxes and grow the economy. (not cut spending per se) And conversely the fastest way to grow the deficit is to increase spending.

-In short, cutting spending is not near as effective as economic growth at reducing the deficit but increasing spending is most effective way to blow the deficit out of control.

The great irony is that liberals (well, in the modern era, many so-called conservatives too) want to spend as much as possible BUT they want to raise tax rates which -paradoxically- limits the amount of money they have to spend.

In theory, "conservatives" (term used ever loosely of late) want to lower RATES to maximize economic growth AND limit spending. Unfortunately under both Reagan and Bush spending ballooned so we've never seen this come to fruition.

One could argue that both men were winning wars while the Dems have ignored foreign problems leaving them for Republicans to solve; but that argument, while it has merit, only goes so far. Spending under Bush has been out of control since the earliest days of his administration.

Growing the economy is the most effective way to fight the deficit. Even under Bill Clinton's so-called "balanced budget for the next 10,000 years" his numbers relied on economic growth increasing revenues. The Bush tax cuts have been EXTREMELY effective doing exactly what supply-siders said they would do, increase revenues.

Now if we could hold spending in check (much less cut it) we'd have something.


TrackBack

Listed below are links to weblogs that reference Tax Revenues Jump - Liberal Heads Explode:

» Don Surber linked with NYT: Bush vindicated on the economy

» Another Blogger linked with Tax Revenues are Skyrocketing

» Morning Coffee linked with Tax receipts up… Blame Bush

» two or three . net linked with Somebody didn't tell the economy

Comments (46)

Voodoo ECONOMICS! Damn tha... (Below threshold)

Voodoo ECONOMICS! Damn that VooDoo!

*cough*Laffer Curve*cough*<... (Below threshold)

*cough*Laffer Curve*cough*

As a true conservative, I a... (Below threshold)
J. White:

As a true conservative, I am NOT a die-hard Republican...I am a free-thinking independent. Having said this, I'm no friend to any liberal Democrat, but to act as though either party (including Republicans) can claim any semblance of fiscal discipline is simply not reality. It's great the deficit is reduced....but understand that I'm a hardcore fiscally-responsible independent. I say BALANCE the budget and ELIMINATE the debt. If only the political left & right could moderate their bellicose commentary, the accomplishments of this great country would be that much greater.

Now if the Congress critter... (Below threshold)
stan25:

Now if the Congress critters would realize that living within their means would really be good for this country. I do not look for that to happen any time soon. Not as long as there are attorneys running things. We all know that the pork spending is really a bribery scheme to keep them in office

Well, now you know it's an ... (Below threshold)
Ebonis:

Well, now you know it's an election year. Suddenly miraculous changes occur about four months ahead of the November fun.

Taxes are lowered, but the revenue goes up.
The price of a gallon of gas starts to drop.
The end of the war is "just months away."
Suddenly everybody in office is a born-again fundamentalist Christian, going to church three times a week and whacking the bible like a fly-swatter.
Instead of hiding out at the ranch this August, Bush and his insipid wife are on Larry King and Oprah every week between now and the election.
Pork barrel projects spring up in contested state races like mushrooms on cow stuff.
At least for the next four months life will be real good for everyone.
But come January, you'll get the bill.

null:"I've seen this... (Below threshold)

null:
"I've seen this story running on every major news outlet. "

...with the included spin, as noted above.

"BALANCE the budget and ELI... (Below threshold)
Joe:

"BALANCE the budget and ELIMINATE the debt"

My thoughts exactly. Regardless of the size of the budget deficit we are still going further into debt. The US. does not have unlimited credit. With a steady de-valuation of the american dollar we are already having trouble finding buyers for our debt. The "growth" of our economy means nothing if it is supported by foriegn nations buying our debt. Eliminating the debt is the only sure fire way to stop the house of cards from collapsing.

Raising taxes too high stif... (Below threshold)
Mac Lorry:

Raising taxes too high stifles economic growth, that's a given. Lowering taxes too low decreases government revenue; obviously a zero tax rate wouldn't raise any revenue. That means there's an optimal tax rate for any specific tax and there's an optimal set of taxes (income, sales, gas, etc.) that will raise the most revenue for the government. Given the tax cuts of 2003 have both stimulated the economy and increased government revenue, it's likely the optimal tax rates and set of taxes would further improve both the economy and tax revenue.

The optimal tax rates for the optimal set of taxes likely changes depending on things like inflation, interest rates, and emerging markets. So where are the computer models that can tell use what the optimal tax rates and set of taxes are for the current economic conditions? The computer modelers claim they can predict what the climate is going to be in 50 years even though they can't predict next week's weather. Obviously then, computer modeling doesn't require understanding the system being modeled, so there should be no need to understand the nuances of the economy to produce a computer model that tells us what the optimal tax rates are for each tax in the optimal set of taxes. Either that or the climate models are based on Hitler's "big lie" principle, you know, the same principle underlying the New Orleans levee non-system.

Maybe such computer models already exist. In that case it would be interesting to know what they predict.

You know, if the New York T... (Below threshold)

You know, if the New York Times were to be unbiased, the story would have been: "More money in on tax revenues".

That's it. Oh maybe embelish as to why, such as including that the economy going up causes revenues to increase, but why bother including political spin on both sides of the isle? "oh the repubs say this, the dems say this". That is where the political spin of the paper comes in to play. Keep that for the editorial page, the rest of the paper is supposed to be NEWS.

If all wars were over, defi... (Below threshold)
Burt:

If all wars were over, deficits were zero, taxes were low, everyone was wealthy and healthy, the Liberals would still find something to hate Bush about. Looking for fairness in the Liberal media is useless, so you might as well keep punching. Balance be damned -- we'll never get it from them, so why give it to them?

"wow, i get it now! so in o... (Below threshold)

"wow, i get it now! so in order to solve our budget deficit problem, we just lower the tax rates even further! "

...to a certain point, anyway, while also coupled with cutting spending on silly programs. Historically, taxes in almost all governments have been set too high for optimal growth and prosperity, because we have idiots who think that higher taxes are more "progressive" or something, and that there is such a thing as a free lunch.

On the other hand, every time there's a major tax break in the US, government income has grown, and when taxes go up, government income goes down.

Look up "Laffer Curve" some time, and get a little educated before you try to be sarcastic. It just makes you look silly.

Hmm.. I wonder about the pe... (Below threshold)
Logis:

Hmm.. I wonder about the percentage of executive salaries that have gone through the roof enough to produce that many billions of dollars of tax revenues, versus the percentage of low-wage Americans that have gone into more extreme poverty over expanding costs of living, rising health care costs, and the unavailability of jobs other than Wal-Mart to help them feed their families while the rich get richer.

More caviar?

Why do you skip past the... (Below threshold)
Jody:

Why do you skip past the statement in the Times article that mentions that tax revenues are just climbing BACK up to where they were when Clinton left office?

Because it's not true. Revenues are nearly 10% above what they were then.

"Why do you skip past th... (Below threshold)
d_Brit:

"Why do you skip past the statement in the Times article that mentions that tax revenues are just climbing BACK up to where they were when Clinton left office?

Aren't you 'forgetting' the dot.com burst with the resulting recession that ensued? It is remarkable that revenues are BACK to Clinton levels without high taxes.

Perhaps you have an explanation? One that doesn't involve painting conservatives as greedy monsters...but actually contributes to further understanding.

Is it such a great victory for Reganomics when they get taxes back to a nominal Democrat's level?

But that is the point, its been done without raising taxes.

Lastly, wake me when America can be so great as to aspire to be a Wal-Mart...Posted by: Liberal Spinning Republican Hater"

While no fan of Wal-mart nor mediocrity, how is providing the poor low cost goods bad?

Raising taxes too high s... (Below threshold)
Paul:

Raising taxes too high stifles economic growth, that's a given. Lowering taxes too low decreases government revenue; obviously a zero tax rate wouldn't raise any revenue. That means there's an optimal tax rate for any specific tax and there's an optimal set of taxes (income, sales, gas, etc.) that will raise the most revenue for the government.

DING!

Given the tax cuts of 2003 have both stimulated the economy and increased government revenue, it's likely the optimal tax rates and set of taxes would further improve both the economy and tax revenue.

Give that man a ceegar

---------

and "Liberal Spinning Republican Hater" got deleted for asking....

Why do you skip past the statement in the Times article that mentions that tax revenues are just climbing BACK up to where they were when Clinton left office?

Geeze you nitwit... I DID include it AND it proves my point too.

It was ECONOMIC GROWTH that gave Clinton his tax revenue. Granted it was an economy based on smoke and mirrors but that is what drove the tax receipts.

If we want SUSTANTED economic grotwh we can have an infinite number of dotcom booms or a sane tax structure. - our pick.

So in closing, you didn't read the post AND you proved my point anyway. You just got delted.

But from reading the commen... (Below threshold)
Paul:

But from reading the comments (before I cleaned them up) I was right about liberals' heads exploding.

Laffer strikes again! ;-)</... (Below threshold)

Laffer strikes again! ;-)

Um.One data point ... (Below threshold)
Terence R. McCain:

Um.

One data point a trend does not make.

Perhaps we can hold off celebrating until a more rational point is reached... such as consistent generation of a surplus, with which we can begin to address our long-term solvency issues.

That's not a liberal view, just a common sense one.

The reason the revenue... (Below threshold)
adam:

The reason the revenues went up is simple. We have more to spend. When the rich(employers) have more money they invest it in stock and payroll this makes tax revenues go up. By the way, Jimmy Carter did not lower taxes! He raised taxes on the rich and gave to people who don't(pay taxes). He was the worst president ever. Socialism does not work! If I am taxed 10,000 less than the year before I will spend that money which is taxed and wherever I spent that money it is taxed again. I think a flat tax would help poor people to understand they get all their taxes back. It was the right move when Kennedy did it and it was the right move when Bush did it. He explained at depth but librals hatred toward their president deafens your ears.

"Hmm.. I wonder about th... (Below threshold)
d_Brit:

"Hmm.. I wonder about the percentage of executive salaries that have gone through the roof enough to produce that many billions of dollars of tax revenues, versus the percentage of low-wage Americans that have gone into more extreme poverty over expanding costs of living, rising health care costs, and the unavailability of jobs other than Wal-Mart to help them feed their families while the rich get richer. More caviar?"Posted by: Logis

Here is the very heart of the liberal aversion to conservative fiscal principles.

It's unfair! That's IT in a nutshell...

Pointing out that life is unfair mostly brings a response of anger. So, are liberals angry at life?

Yes, I believe they are... Secularism, the 'religion' of most liberals, posits that commerce, human nature and the real world can be controlled by the ideology of 'good' intentions...

It refuses to look squarely at the natural laws of economics and most especially the 80/20 rule. For those of you who are unaware, an Italian scientist in the 1800's discovered that in any economic system allowed to operate freely, 80% of the resources gravitate into the hands of 20% of the participants.

There have been hundreds of studys done that confirm the basic application of this 'rule'.

As a simple thought experiment to personally confirm this, just imagine the following:
Pick a statiscally random group of 100 people.
Hand each person a $1000. with the stipulation that ALL of it goes into a 'pot'.

Conduct a series of 100 yd. races, only 10% of which can be in the pot in any race, with each person gaining a 'monetary reward' after each race, the amount of 'reward' prorated according to their placement at the finish line.

At the end of ten races, 80% of the money will be in the hands of 20% of the participants...

Ah, the unfairness of it all.

Whether for good or ill, this is simply how the physical universe has been set up. And at base, liberals rail against the injustice of it.

My view is that there are good and valid reasons for it being set-up this way. Which is not to say that unscrupulous individuals and groups cannot and do not unfairly leverage their assets into unconscionable gains at the expense of others.

What liberals 'rage against unfairness' prevents them from considering is that attempting to cure the 'disease' of unfairness results in unintended and unforeseen consequences which are more even harmful to society. Ah, that pesky 'law of unintended consequences"...

A clear case of the cure being worse than the disease...

The only successful 'solution' to the problem of unfairness that has ever been found is capitalism in a free democracy coupled with a culture of individual responsibility and social norms rendering upon individuals who engage in charitable giving high social status.

This 'system' does NOT eliminate unfairness nor achieve parity in assets. It does give everyone a chance, rewarding individual merit AND most importantly creates over generations Reagans 'rising tide', creating a demonstrably better life for everyone.

THAT is WHY conservatives are right in their financial principles, it is a simple matter of their social prescriptions being more in harmony with reality than liberal ideology.

But, but, it's just NOT fair!

No, it isn't children but it IS the way things are...and there is far more happiness to be found in working with things as they are than in vainly trying and inevitably failing to change reality.


<a href="http://wi... (Below threshold)
wave_man:
Terence R. McCain at July 9, 2006 07:16 PM said:

Perhaps we can hold off celebrating until a more rational point is reached... such as consistent generation of a surplus, with which we can begin to address our long-term solvency issues.

To the contrary, every victory should be celebrated. Keeping this quiet allows the contrarian view that we can 'tax ourselves to solvency' to become the prevailing one.

Deficit reduction is important, but the only way to accomplish it is Fiscal Discipline. Every time tax cuts have been tried since the 60s, under Kennedy, Reagan, and Bush 43, revenues have increased. Tax increases under Carter, Bush 41, and Clinton have resulted in revenue stagnation. Now, discipline is in order. When President Clinton, under pressure from and in conjunction with a Republican Congress tried it in the 90s, we saw improvement in the deficit.

Currently the Republican Congress continues to increase spending. The Democrats are out there proposing tax increases, and more new Federal Programs. Neither will lead to deficit reduction, and the latter will lead to further stagnation.

Only a conservative publica... (Below threshold)
Dave:

Only a conservative publication could brag about a deficit of ONLY $300 billion instead of $400 billion.

Kind of like the media's "good news" about Iraq or the spying or the fictitious and fraudulent war on terror.

Any reduction of the defici... (Below threshold)
groucho:

Any reduction of the deficit is a good thing, no matter how it is achieved. It's just numbers on paper, though, unless the majority of hard-working (shrinking) middle class folks see growth in their real income and ability for advancement, not stagnation. This is a reflection of the small percentage at the top doing better than ever, largely at the expense of the poor and middle cless. Good for a sound bite, but meaningless in the big picture.

Talk about heads exploding.... (Below threshold)
joe chip:

Talk about heads exploding. Just a bit of incendiary frothing from the "right" wing: try calming down and communicating from a point of inclusion, rather than division. The typical ploy of many right-wing pundits (I'm not sure if you can call them Republicans) is to spew this divisive crap about "left-wing" this, "liberal-bias" that. Quit whining and define yourself in objective terms, for a start. Describing supply side economics as "voodoo" is not patently liberal. Long-term growth is not empirically related to tax cuts (which typically result in higher prices and deficits). The fact that (at least from the perspective of today's news) the deficit will fall this year is encouraging. But the long-term prognosis is static. The deficit will still be over $300 billion. The entrepreneurial effects of the tax cuts have led to an increase in corporate tax revenue, and revenues from executives and investment income, though not enough to overcome the loss in overall tax revenue. A bit of fiscal conservatism seems like the correct treatment plan, though the Republican controlled House and Senate have been nothing close to fiscally conservative. Trying to claim that "conservatives are right in their financial principals" is about as ignorant as it gets, unless you assume that conservatives habitually ignore their personal principals and apply the principals of free-riding political opportunism freely. Which Democrats and Rebublicans in the congress are a part of the problem, or a part of the solution, is open to debate. There's the good and the bad among us all. Pushing the propaganda which divides Americans, however, in terms of black and white, Republican and Democrat, conservative and liberal, is the greatest transgression. It's a disservice to our common heritage that inhibits our society and stains our achievements. The division of society is not an American tradition.

I think the Walmark compari... (Below threshold)
Oslo:

I think the Walmark comparison does not quite fit. Walmart makes the highest profits from constantly pushing down prices, but it does it on both ends, forcing its suppliers to cut prices, thus maintaining it's profit structure.

It would be like the U.S. government simultaneously cutting taxes, AND drastically pushing down expenses or spending. Since the U.S. is not quite doing that, the comparison to Walmart does not exactly fit.

An equivalent example would be if Walmart was cutting prices while keeping the cost of good steady, or even increasing the cost of goods.

Next thing, you wacky kids ... (Below threshold)
MikeSC:

Next thing, you wacky kids will tell us that the increased incarceration rate of the 90's led to the dramatic reduction in crime.
-=Mike

Since the deficit is down f... (Below threshold)
Mark:

Since the deficit is down from $412 billion to $300 billion you state that Reagan was right. Right about what. Clinton got the deficit down to -$100 billion. What did Reagan say about the effect of responsible tax collecting? How can somebody be a conservative when they spend hundreds of billions more than they have, and pay interest on top of that to boot. The facts are that a certain segment is getting a free ride in this country and that isn't right. What will happen during a downturn if a Republican administration can only get up to a $300 billion deficit in the first good year in 5 years? The rich will pay much more in the long run for this fiscal responsiblility than the poor ever thought about. They don't have that much to lose, but the rich do, and this is the way to lose a good deal of it.
-Mark

"Clinton got the deficit do... (Below threshold)

"Clinton got the deficit down to -$100 billion."

...by cutting the the hell out of the defense appropriations that we've been having to make up for since 9/11. You know, things like lowered front-line troop manning, not enough body armor, not enough spares for equipment, et cetera.

""BALANCE the budget and... (Below threshold)
d_Brit:

""BALANCE the budget and ELIMINATE the debt"
My thoughts exactly. Regardless of the size of the budget deficit we are still going further into debt. The US. does not have unlimited credit. With a steady de-valuation of the American dollar we are already having trouble finding buyers for our debt. The "growth" of our economy means nothing if it is supported by foreign nations buying our debt. Eliminating the debt is the only sure fire way to stop the house of cards from collapsing." Posted by: Joe

Absolutely true but the problem of course is that neither side will agree to end entitlements for their pet programs.

However, I do have a proposal that might change all that and I'd welcome feedback on it.

As crazy as this will sound, I believe it's possible to over a very long time, end the debt, greatly reduce taxes and have plenty of money to spend on needed programs.

No, I am not proposing that we can have our 'cake and eat it too'.

Everything I am about to propose is based in mathematically and fiscally sound principles.

It will take sacrifice and most importantly, fiscal discipline. And I know how improbable and even oxymoronic the words Congress, the American people and fiscal discipline are in the same sentence...

Nevertheless, here goes:

We all are familiar with individuals who have been 'blessed' with the inheritance of a trust fund.

I propose that we create a version of that for the American people.

'Running the numbers and doing the math' is something that any actuarial accountant worth his salt could do to arrive at the actual amounts and details. Being a 'big picture' guy and 'idea' man, I'll leave the details to the accountants and only elaborate the basic principles. So, please do not hold my feet to the fire over amounts used by me to illustrate the idea, ok?

I also realize that while the idea is simple, successful implementation of this idea would be complex. So, if complexity puts you off, you may want to pass on this post right now.

So, starting whenever, we institute a new tax!

Hey, liberals like it already but conservatives are running for the door!

Now stay with me fiscal conservatives, I promise this is a tax you CAN live with and tolerate.

It's an investment in ourselves tax...Matter of fact, it's not accurate to think of it as a tax, so view it for what it in fact is, an investment in our children's future and a gift from those alive today to those yet to come.

One that would fundamentally alter the future economic circumstances for ALL future generations.

A big, bold claim I know, so each of you judges the worth of the idea, fair enough?

It is the idea of compounded interest and capitalism taken to the max...

For purposes of discussion, say the new tax is1% of all gross income. Making it based in gross would eliminate the possibility of evasion. Everybody would pay into it and Congress couldn't play fast and lose with how much was being collected.

All monies collected would go into a version of Al Gore's 'lock box' (groan, groan, ok the man had one good idea in his life, come on)

The lock box would HAVE to really be a lock box because the only way to make this work is to create a fiscal sanctuary that Congress AND The American people simply COULDN"T get into. AND as you'll soon see, as time passed, the temptation to 'raid' the lock box would become irresistible.

To make this work a Constitutional amendment would be needed, making this a constitutionally created program, it would have to be literally woven into the constitution.

Congress would have to cooperate and the only way they'd actually do that is if the public and media embraced this idea and demanded that Congress implement the idea.

Full transparency and a special, 'unanimous vote condition' would be written into the legislation creating the tax fund and its eventual distribution.

That means that in order to change anything, Congress would have to get a special, unanimous approval from BOTH houses AND then it would have to put the proposed change through the state amendment process, which requires ¾ th's of the states legislatures approval.

I figure that just the unanimous voting requirement would keep Congress from raiding the fund because as we all know you can't get 100% of the people to agree to anything... There's always at least one cantankerous cuss who's NOT going along with the group, either out of spite or principle.

Once the needed protection was set up for the fund and a real lock box created we would then start the new tax. Eventually, the amount of money collected would build to an astronomical amount. That means it would need to have built-in safeguards to ensure that it keeps growing untouched until the time was right.

Again the actuaries can run the numbers but the day would come in say, 50yrs. but whenever, then the first payout phase could begin.

Payout would be set up so that the amount taken out of the fund on a yearly basis could never as much as what is being put on a yearly basis into the fund. This would ensure that the fund would continue to grow.

The payout in Phase 1 would initially go to eliminating the debt. It would again be written into the constitution that once debt elimination began, Congress could NOT add to the debt.

Boy, they're not going to like that requirement.

Once the debt was eliminated, Phase 2 would begin and payout would go to reducing taxes. For every dollar paid out from the fund, taxes would have to be reduced by one dollar. In time with the fund increasing on a yearly basis, taxes would be greatly reduced. Yet Revenues would grow because the economy is growing due to less 'tax-drag' upon it.

To eliminate Congress simply raising taxes to end-run around the requirement, an overall cap would be placed upon Congress as to how much it could raise taxes. Say to 10% of whatever amount the fund was paying out. Probably a yearly cap as well as an overall cap would be best.

The only exception to this would be in times of war or national emergency and then it would take a 3/4th's vote of Congress, with mandatory yearly renewal of any increase in taxes over the spending 'cap'.

What I'm basically proposing is using access to a national 'trust' fund to impose spending and taxing limits upon Congress.

I'm also proposing to gradually shift taxes from the income tax to the trust fund. The country still needs revenue for public projects, and necessary and worthy programs.

Why would liberals go along with limiting Congresses ability to tax and spend?

Ah, because of the carrots I offer :-)

Once taxes fall to a predetermined level, say 10%, the payout enters phase three...

Before I describe the third phase of the payout from the 'lock box fund' lets reiterate where we are; the debt is paid off, so the country is debt free. Over time, taxes have been reduced to an easily sustainable level, say 10% of income.

Ok, phase three payout and the first carrot:)

The fund now starts paying out to eliminate the remaining personal taxes. Starting from the bottom up...So those most in need are benefited first.

Yet over time, everyone benefits with the greatest amounts going to those paying the most into the system. While they wait longer to receive those benefits, they are compensated with a commensurately greater reward.

Eventually the 'trust fund' grows to the point of essentially eliminating personal taxes.

Incidentally, no one said anything about eliminating business taxes, though they also should be limited to a set amount, I favor a flat tax but that's another discussion.

In time we will have almost completely eliminated taxes from income and thus it is time for the fourth phase and, an even bigger carrot. Remember, the trust fund has continued to grow...

The fourth phase of the payout is individual revenue enhancement. Again, we start at the bottom with payments growing until equal to the taxes each would have paid per their income prior to the implementation of the trust fund.

It's important to consider the range of individual responses to this program. Basically one of three categories of response is possible. People either work less, the same or harder. But in any case, the amount of revenue enhancement is set by the amount of income they generated at the time their payments started.

As time goes by, more and more people start receiving income from the trust fund, the longer you wait the greater the amount when you do start receiving revenue from the trust fund so again there is compensation and again the longer someone waits, the more able they are to forego the revenue in any case.

Eventually, in say a hundred years, (?) the trust fund has grown to the point where the fifth and final phase can begin.

And boy, is this carrot a whopper, the biggest of all!

The trust fund starts creating individual trust funds that start at birth...for everyone.

Because one child has no inherent right to more than another, (we're all created equal...) the amount placed into every child's trust fund is the same. With the yearly amount growing as the fund continues to grow. This would continue until the child reached its majority. Then the funding would stop and the individuals' fund would be available for access by the new adult.

Details like the unfortunate death of a child could be easily worked out, with whatever amount going to remaining siblings, if no siblings existed, then perhaps it would be returned to the public trust fund for distribution to all.

How much, and in what manner the individual trust fund could be accessed would have to be worked out. Common sense would seem to indicate that a mandatory amount should be required to remain so as to continue to grow for retirement, etc.

Depending upon the use envisioned, the individual might be required to withdraw funds according to a formula. Obviously there would have to be exceptions built in for things like medical emergencies.

Well there you have it. It may be idealistic but as I pointed out before, it appears to me to be based in sound fiscal principles.

It already does work for individuals lucky enough to inherit. Think of Paris Hilton...or not. But you get the idea.

The only thing I see as a real obstacle to implementation of the idea is simple human cussedness.

As the saying goes, people can 'f' up a wet dream, but we got it right once 217 years ago. I don't see why we can't get lucky one more time.

One thing is for sure, with the ongoing emergence of artificial intelligence, robotic manufacturing and the eventual discovery of fusion based power (the suns' atomic energy, environmentally clean) resulting in such low costs as to be essentially 'free' energy, along with the incredible mineral resources that lie in the asteroid belt, productivity will rise to the point of absurdity and we will HAVE to find a new paradigm in economics. People simply won't HAVE to work. It's NOT a case of 'what if', it is inevitable and a case of when it happens.

So, let the criticism begin and hopefully there's enough worth in the idea that smarter heads than mine can figure out what needs fixing and actually make it work.

One data point a trend d... (Below threshold)
drive-by thinker:

One data point a trend does not make.

No, no, you're off message. Positive data points are unmistakeable indicators of the trend we've all come to expect; it's only the negative ones that are mere anecdotes, and don't a trend make.

Walmart, the world's largest discounter, has the lowest PRICES but makes the most MONEY.

In part because they PAY such miniscule WAGES and BENEFITS that many employees have to go on the public DOLE for health care, food, and the other luxuries they foolishly and shortsightedly demand.

Hey, maybe you're on to something here! The US government can drastically cut spending on health and social programs, and put those expenses back on... WALMART!

In physics, it's the fallacy of perpetual motion; in supply-side economics, it's simply business as usual...

"One data point a trend doe... (Below threshold)

"One data point a trend does not make."

"No, no, you're off message."

...not to mention missing the few hundred other positive data points that have rolled by over the last few years.

The increase in tax revenue... (Below threshold)
marty:

The increase in tax revenue is due to the smart money taking a capital gain upon leaving the stock market, or the real estate bubble. There is a dusey of a recession coming, coupled with a devaluation of the dollar. The resulting "stagflation" will make the late seventies and early eighties look like a walk in the park.The best place to store your gains now is gold or other commodities. When it looks like the dollar devaluation is over jump into american industrials. the great devaluation of the dollar will make america the lowest cost provider of whatever can still be produced profitably in the first world. barring a trade war, the us will become an industrial giant once more.

it must be nice to write ar... (Below threshold)
mean daddy:

it must be nice to write articles for a living. i think you should go work at Wal-Mart for a while and see how great the economy is treating you. your argument is basically that the deficit is not as ENORMOUS as it was believed to be. now its just HUGE. i think we can solve the problem by blaming the media. at least Bush and his apologists do that well. i've got go now so i can burn a flag and destroy the "institution" of marriage while i'm on my way the big media conspiracy meeting.

OsloYou're confusi... (Below threshold)
Paul:

Oslo

You're confusing profit with sales.

Lower taxes means higher SALES.

How we spend that increased money is a different debate. (and one I always lose) But lowering the prices (of an overpriced product) increases gross sales. (tax receipts)

Now if Walmart just paid their vendors anything they demanded, they'd go broke.


===

The fastest way for Walmart to make more profit is to open more stores and sell more products to more people. (grow the economy) That will make Walmart more profit than going to vendors and asking for another price cut. (cutting spending)

OTOH if they raise the prices (tax increase) sales would fall and revenue would dip effecting profit in the long run.

Now if they REALLY want to screw things up, they spend too much on the product so they lose money at a real fast rate. (you know the old joke about losing money on each one but making it up on volume)

Proving that cutting the prices is the fastest way to get money more into the register but spending too much is the fastest way to kill profits.

If they cut prices (taxes) AND keep prices (spending) in check they make big profit. (reduce deficit) Simple.

The walmart comparison is f... (Below threshold)
Ehans:

The walmart comparison is flawed. Wallmart has low prices because it is competing with other stores, so even through they are making less money on each product, they get it back through the higher yield they have, because more people buy there. The US government does not compete with anyone other government for you tax money, therefore, if they lower the tax rate, they make less money, because everyone has to pay their taxes, you cant just shop around to find the cheapest government rate. I do realize this is a simplistic view, and there are other factors, but the wallmart comparison is simply not a comparision at all

You show a liberal facts, f... (Below threshold)
jainphx:

You show a liberal facts, figures,not only of Reagan,and J.F.K,and nothing seems to sink in.Jimma (the worst president to inhabitat the world) raised taxes,what happened.Johnson's great society took from the Middle class and give to the lazy ,Caused deficits that were still trying to recover from but none of that means a darn and figures lie,I just want to scream at the density of liberal possitions.

The Laffer Curve is part of... (Below threshold)
Totally Matt:

The Laffer Curve is part of the Islamic conspiracy to take over the free world! Look at the Wikipedia entry! Laffer credits "14th century Islamic scholar Ibn Khaldun" with its initial conceptualization.

Then he credits Keynes with being its proponent within contemporary economic theory.

So a 14th century Muslim and a 20th century liberal probably would have disagreed with Laffer and his friend Dick Cheney as to what the optimum tax rate is, but it's cool how the history of ideas unfolds.

Congratulations guys, all t... (Below threshold)
Professor Plum:

Congratulations guys, all the comments are definitely making an impact. Things are looking up, keep up the good work.

>The walmart comparison ... (Below threshold)
Paul:

>The walmart comparison is flawed. Wallmart has low prices because it is competing with other stores, ... The US government does not compete with anyone ... if they lower the tax rate, they make less money

You clearly don't own a business.

The tax man has plenty of compitition for my money. The electric company, the gas company, the mortage company et al.

When I have to pay the tax man more, I pay the rest less... Slowing the economy meaning less taxes get paid.

To say I can't "shop" taxes is foolish.

I'm pondering a large purchase right now. The difference it will make in my taxes is one of the major concerns. If it is advatagous, I'll make the deal. If the tax burdern kills the deal, they get less money overall.

Trust me, everything has a market value including taxes.

If you don't understand the Walmart comparision is it because you don't understand how money works.

Get a few years on you, run a business or two and get back to me.

Lets make this a real conve... (Below threshold)
Aaron:

Lets make this a real conversation. The fact that conservatives are celebrating a lower deficit off of their own estimates is asnine.

I estimate that I will earn 50k this year. Oh wow! I actually made 60k! That means I'm 20% more productive!

No, that means my estimate was 20% WRONG.

Besides that fact, you're also celebrating that we have only have more EXPENSES than REVENUE. This practice (perfected by Pres. Bush's prior two bankrupt corporations) only serves to worsen our situation.

If you told me that the national debt was cut by 100k, I'd be impressed. But this measly 100b differential is nothing more than bad math plus recovering economy.

Finally, lets discuss spending. If this decrease was due to a responsible spending plan, I'd be very impressed. Spending is much more easially controlled than revenues - which will fluctuate based on market conditions. The spending for our two wars aren't even included in the national budget, even though we've been doing this war thing for almost four years now. How responsible is that?

"I'm pondering a large purc... (Below threshold)
Aaron:

"I'm pondering a large purchase right now. The difference it will make in my taxes is one of the major concerns. If it is advatagous, I'll make the deal. If the tax burdern kills the deal, they get less money overall."

You're falling in to a trap of idiocy. You're telling me that you won't invest in a piece of property that will make you more money because of taxes?

You can only increase your taxes if you increase your profits. You don't want to increase your profits? Thats like not wanting to earn a gold bar because it is too heavy for you to carry.

When performing purchase decision making you have to look at RELEVENT costs, and income tax is not one of them. Sales and Property taxes are MAYBE, but neither are relevent for our conversation, which is a study on FEDERAL taxes.

You can include tax consequences in cashflow, but since you can immediately expense equipment (even if it is financed) you tend to come out with tax BENEFITS before there are CONSEQUENCES.

You might own a business, but you're no accountant. Fortunately for you, I am.

>You might own a business, ... (Below threshold)
Paul:

>You might own a business, but you're no accountant. Fortunately for you, I am.

Well you are a piss poor accountant.

>You're falling in to a trap of idiocy. You're telling me that you won't invest in a piece of property that will make you more money because of taxes?

NO jackass. I'm telling you I might not invest in a piece of proporty becasue I might NOT MAKE money depending on the taxes. Simple.

I doubt you are an accounant. No real accountant would discount factoring in tax liability into ROI calulations.

Dimwit.

Nothing is pure black and w... (Below threshold)
Tom:

Nothing is pure black and white...you simple minded people!

Which taxes Paul? Income T... (Below threshold)
Aaron:

Which taxes Paul? Income Taxes? Property Taxes? Sales Taxes? Which taxes are going to affect this decision?

As I said before, I may understand the property and sales tax arguement - they add to the costs of your purchase, therefore decreasing the profitability. Also, if you would speak clearly and say "I might not make ENOUGH money," I might also agree with you.

But if you're talking about INCOME taxes - which are the ones that we're discussing in this thread and the only ones the Federal Gov't controls, you only pay INCOME taxes on NET INCOME - meaning PROFIT.

If you aren't making money from your purchase, this is actually a TAX BENEFIT because it REDUCES your taxes. Only if you MAKE money, you pay taxes.

Your statement "I might not invest in a piece of proporty becasue I might NOT MAKE money depending on the taxes" is patently over the top, and lacking in literal substance. Your generalizations only serve to further disenfranchise and miseducate those who read your words.

Don't believe the hype.... (Below threshold)
Aaron:
dbrit says life's unfair an... (Below threshold)
Robert:

dbrit says life's unfair and liberals should just get over it.

Agreed.

And if we offer amnesty to illegals while those who wait their turn get screwed, big deal!!
Stop the Presses, "Life's not fair!!"




Advertisements









rightads.gif

beltwaybloggers.gif

insiderslogo.jpg

mba_blue.gif

Follow Wizbang

Follow Wizbang on FacebookFollow Wizbang on TwitterSubscribe to Wizbang feedWizbang Mobile

Contact

Send e-mail tips to us:

[email protected]

Fresh Links

Credits

Section Editor: Maggie Whitton

Editors: Jay Tea, Lorie Byrd, Kim Priestap, DJ Drummond, Michael Laprarie, Baron Von Ottomatic, Shawn Mallow, Rick, Dan Karipides, Michael Avitablile, Charlie Quidnunc, Steve Schippert

Emeritus: Paul, Mary Katherine Ham, Jim Addison, Alexander K. McClure, Cassy Fiano, Bill Jempty, John Stansbury, Rob Port

In Memorium: HughS

All original content copyright © 2003-2010 by Wizbang®, LLC. All rights reserved. Wizbang® is a registered service mark.

Powered by Movable Type Pro 4.361

Hosting by ServInt

Ratings on this site are powered by the Ajax Ratings Pro plugin for Movable Type.

Search on this site is powered by the FastSearch plugin for Movable Type.

Blogrolls on this site are powered by the MT-Blogroll.

Temporary site design is based on Cutline and Cutline for MT. Graphics by Apothegm Designs.

Author Login



Terms Of Service

DCMA Compliance Notice

Privacy Policy