The Commerce department released a report recently stating that the US economy grew a solid four percent in the 2nd quarter, despite a few rough days on Wall Street.
Also, federal revenues continue to increase to higher amounts (and as percentages of the GDP) since the 2003 Bush tax-cuts.
All of this begs the question: If the tax-cuts are helping the economy boom and are increasing tax-revenues (especially corporate income tax revenues), why would any Presidential candidate, Senator or Representative want to undo all of that? What possible positive income could come from it?
Which provokes the title for this blog "if it ain't broke, don't fix it".
A tax increase would be aimed at increasing tax revenues- but that's already happening with the tax cuts. It's possible a tax increase would temporarily bring in more money, but its harmful effects on the economy could drag us into a recession.
That could even decrease tax revenues- defeating the entire purpose of the tax increase.
Lack of knowledge in this area of taxes is all too common here in Minnesota, where just about anything can justify a tax increase- even when we just had a multi-billion dollar surplus.
Somehow, the right conversation is not taking place.
We should be discussing how to cut taxes further, knowing full well that revenues may still increase and Pawlenty may find new programs to start with the extra dough.
But, when revenues finally fall- then we know we have begun real progress towards limited government.
Subscribe to:
Post Comments (Atom)
3 comments:
The Congressional Budget Office report on federal revenue growth does show GDP and revenue growth between 2003 and 2006, but it also says:
"Two caveats to this analysis should be noted. First, analyzing revenues as a share of GDP does not illuminate the underlying causes of GDP growth itself, including the possible influence on GDP from tax policy."
Second, the economy is recovering from a recession that started before 2003, making the comparison misleading. If you compare per-capita growth from 2001, we've barely made it back to even.
Third, most of the recent income growth went to upper-bracket taxpayers in the form of capital gains. Most taxpayers have seen little real income growth.
Your quote shows that Bush's tax cuts can't take credit for everything, as it is the American people that cause the GDP to rise. The real question is: What enabled the American people to work more, invest more, and increase the GDP more? There's a good line of logic to say that the tax cuts enabled people to do so.
In 2001, we were bloated from the dot com bubble which popped at the beginning of Bush's term. Although we've "barely made it back to even", the growth we have made is sustainable- unlike the bubble that Bush inherited.
Your third statement is misleading. All income levels have seen an increase in their income since the Bush tax cuts. Your assumption that "most taxpayers have seen little real income growth" is based on the idea that the people in the lower brackets 4 years ago are the same people in the lower brackets today. That fact is simply not true. Many people have entered that low tax bracket- whether it's college students graduating, immigrants entering the US, or retirees. Many people have left that lower tax bracket for one much higher, in part because of the Bush tax-cuts.
And don't forget- revenues are still up.
Post a Comment