An Economics Lesson for Democrats

[andyfox]

I'm not sure what you mean by overtaxed. Apparently, the Bush admnistration is going to spend $500,000,000 more this year than they take in. And the federal debt is now $8,000,000,000,000. So if we're overtaxed we're over-overspending.

The tax system was designed by the rich and powerful for their benefit. So I worry about tax "simplification."

[Kopefire]

Tax cuts alone are not a panacea.

Sound economic policy is first and foremost fiscally responsible.

The problem is not that we have debt, not that we have deficits, not that we have run-away spending, and not that we have high taxes. The problem is that we have all of that together.

A fically responsible plan for the government would look something like:

1) cut discretionary spending to the bone
2) cut taxes across the board by a small, but meaningfull %
3) modify the tax code to further reward savings and investment for average americans
4) revamp non-discretionary programs to lower spending even more
5) use what should be nice revenue increases from 1-4 to pay down debt
6) keep repeating these steps until further tax cuts cause revenues to go down by a greater percentage than you can cut spending.

[Randy_Refeld]

So if we're overtaxed we're over-overspending.

I don't think their is an if on either of those. We are over taxed and the governament spends way too much. When I sya we are taxed too much I belive we are taxed in a range that cutting taxes would promote growth and an increase in tax revenues.

RR

[Abednego]

I didn't say they tripled but that they nearly tripled. Never the less I still had the wrong impression and I stand corrected (damn its embarassing [img]/images/graemlins/blush.gif[/img] to have to admit a mistake like this in such a widely viewed forum .... can we just keep it between us?) .... But the essential point concerning tax cuts is still valid wouldn't you agree? [img]/images/graemlins/crazy.gif[/img]
http://www.heritage.org/Research/Taxes/BG1443.cfm

[natedogg]

When I sya we are taxed too much I belive we are taxed in a range that cutting taxes would promote growth and an increase in tax revenues.

When it comes to a range where cutting taxes would result in decreasing revenues, I'm in favor of that too. I think we spend 3 times as much as we should, if not more. I'm totally in favor of cutting taxes beyond the point where it would increase revenue.

Decreasing revenue is a worthy goal in and of itself.

natedogg

[andyfox]

Isn't a big portion of the government's expenditures taken up by Social Security, defense, and paying interest on the debt? Won't privatizing a portion of Social Security, the continuing war in Iraq and on terror, and the additional $2,000,000,000,000 in debt coming over the next ten years make things worse? Bush has created a new variation on the Democrats' traditional tax-and-spend policies with spend-and-spend. The government has looted the Social Security fund of $1,700,000,000,000 over the past ten years; what will is do with less in the kitty?

[Non_Comformist]

The cost of social security is going to esculate over the next years whether it is privatized or not. In fact the current and near term future cost will remain unchanged. The issue is whether or not we should install a better system for our future and divert general revenue to make up for the transition. This would largely be done with long term government notes. It seems to me then that the question of social security it two fold #1) Is a system of ownershiip better than a government entitlement and B)Can we take on this additional debt.

Its too bad we have been conditioned to look at budget surpluses and deficits on a year to year basis, instead of ove a whole economic cycle. Its tough to know given recent events if Clinton would have ran a deficit or if reversed Bush a surplus.

[Chris Alger]

No I wouldn't agree. You're assuming that all econonmic growth during the 1980's (the direct cause of increased federal revenues) was the result of Reagan's 1981 tax cut. This doesn't make sense, however, because it ignores that (1) Reagan actually increased taxes; (2) states and localities increased taxes; (3) there were a number of factors (like productivity growth) that increased output independently of any tax cut, and that these factors included (4) massive borrowing and spending, at Reagan's behest, by the federal government throughout the 1980's. As your source indicates, "the level of government spending and the type of government spending also influence economic activity." Attributing 1980's revenue increases to the 1981 tax cut therefore doesn't make sense.

[Cyrus]

Jimbo,

The level of taxes is not something written in stone. In general, it is good for business and investment and job-creating endeavours to have lower rather than higher taxes. As a matter of fact, I have been trying for lower taxes, in public life, myself, at appropriate times.

If you look around there is not a single politician who has ever run on a platform of higher taxes!

The question is, (and this is where the political bickering begins!) what is being done with the money collected by the state from taxes. What is the proper allocation among defence (offence, in the case of the US!), education, welfare, etc, and the proper level of funding each one of 'em, if at all. These are political decisions to be sure, but the level of taxes should be the afterthought, not the stepping stone. (E.G. if the country urgently needs WMDs to defend itself, the country's leaders should calculate the cost and then fund the thing, which might also entail higher taxation. A country can never say that it cannot defend itself because that would mean higher taxes. Just an example.)

Without making too much out of it, I believe that this not unlike cooking - where the best chefs in the world and your grandma know precisely the ingredients and the proper mix of 'em. Which changes from menu to menu -- more salt on this dish, less on that, etc.

IMHO, the United States one of the worst possible chefs in the White House right now. Forget that he won resoundingly a second term and how. A man who knows only one recipe in defence (bombinvade, bombinvade, bombinvade, ad nauseum) and economic matters (lesstaxes,lesstaxes,lesstaxes,lesstaxes, ad nauseum) is a lousy strategist and a bad cook.

And a bad poker player : Give me the best player in the world to face if he's gonna adopt one and the same tactic throughout our game.

Take care,

Cyrus

[Cyrus]

Note the operative phrase in the Heritage Foundation link provided by Abednego : "... "the level of government spending and the type of government spending also influence economic activity."

This is precisely what we were talking about in that thread you started.




Heritage on taxes]

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