Insane? maybe. But not without precedent. See my post above. The top federal tax bracket was over 80% from WWII to 1964 and greater than 60% until 1981. :eek:

Kennedy slashed the top marginal rate and the economy boomed. Reagan did the same and the economy boomed again. The fact that the top marginal rate was ridiculously high in the past is not a good argument for attempting to soak the rich again.

Kennedy slashed the top marginal rate and the economy boomed. Reagan did the same and the economy boomed again. The fact that the top marginal rate was ridiculously high in the past is not a good argument for attempting to soak the rich again.

 

 

 

Not making an argument--just providing some historical context for the discussion. Since you have implied a cause/effect relationship between the top marginal tax rate and the performance of the U.S. economy, let's look at some real data to see if a correlation exists:

 

Here is a graph of U.S. annual GDP growth. I believe GDP growth rate is generally regarded as a good measure of the performance of the U.S. economy:

 

 

You mentioned Kennedy tax cuts which I believe took effect in about 1963 or 1964. According to the Wikipedia information I posted, that tax cut (which appeared to be across the board), took the top bracket from approximately 90% to between about 70-75%, where it stayed until 1981. The Reagan tax cut took place in two phases. In 1982, the top tax rate was reduced to 50%, and in 1987, it was further reduced to 38.5%.

 

The data doesn't really back up your claim.

 

Years_________Avg Top Tax Bracket________Avg Annual GDP Growth

 

1950-1963_________________90.7%________________________4.0%

1964*-1970________________73%__________________________4.2%

1971-1981_________________70%__________________________3.2%

1982#-1986________________50%__________________________3.5%

1987@-present_____________36.8%_________________________3.0%

 

Comments:

 

*Kennedy 1964 top tax bracket reduced from 91% to 77%

#Reagan 1982 top tax bracket reduced from 70% to 50%

@Reagan 1986 top tax bracket reduced from 50% to 38.5%

 

For reference to the historical numbers, the Obama tax plan as reported would raise the top rate from 35% to 58%.

1950-1963_________________90.7%________________________4.0%

1964*-1970________________73%__________________________4.2%

1971-1981_________________70%__________________________3.2%

1982#-1986________________50%__________________________3.5%

1987@-present_____________36.8%_________________________3.0%

 

Of course, as the economy gets larger, it can't keep up the exponential growth rate. Furthermore, the growth rate of our population slowed down over the same time period, I believe, and the economy's growth is based on labor capital (workers, equipment, new technology) and other factors that improve labor productivity.

 

It is only logical that taxing the rich is bad for the economy. It's like telling Kobe Bryant he can't take as many shots in a game. Yes, other people will score more points, but Kobe won't win scoring titles and the Lakers won't win as much. Everyone loses (except the other teams/countries who become stronger as the top team gets weaker)

Of course, as the economy gets larger, it can't keep up the exponential growth rate. Furthermore, the growth rate of our population slowed down over the same time period, I believe, and the economy's growth is based on labor capital (workers, equipment, new technology) and other factors that improve labor productivity.

 

It is only logical that taxing the rich is bad for the economy.

 

 

Well, I was just looking for some quantitative evidence to support AcesFull's claim. So, what you're basically saying is that even though it is not supported by the economic data, we should assume taxing the rich is bad for the economy because it is "logical"?

Well, I was just looking for some quantitative evidence to support AcesFull's claim. So, what you're basically saying is that even though it is not supported by the economic data, we should assume taxing the rich is bad for the economy because it is "logical"?

It is supported by economic theory, economists everywhere, and economic data.

 

First of all, cutting the marginal tax rates often make Washington get more tax revenue because the economy grows.

 

Here are two helpful links. This is The Historical Lesson of Lower Tax Rates. This is ECONOMIC BENEFITS OF PERSONAL

INCOME TAX RATE REDUCTIONS.

 

The first one is from The Heritage Foundation, so I guess it may considered untrue. It outlines how the rich pay more under the Kennedy tax rates.

 

Then, how the rich pay more under the Reagan tax cuts.

 

 

This is due to the fact that the rich have less incentive to "hide" their income, as well as the fact that just the economy improves and grows in general. As the rich get richer, the rest of the economy does to.

 

Here is a few paragraphs:

The 1960s

 

President Kennedy proposed a series of tax rate reductions in 1963 that resulted in legislation the following year dropping the top rate from 91 percent in 1963 to 70 percent by 1965.6

 

The Kennedy tax cuts helped trigger the longest economic expansion in America's history. Between 1961 and 1968, the inflation-adjusted economy expanded by more than 42 percent. On a yearly basis, economic growth averaged more than 5 percent.

 

Tax revenues grew strongly, rising by 62 percent between 1961 and 1968. Adjusted for inflation, they rose by one-third.

 

Just as in the 1920s, the share of the income tax burden borne by the rich increased. Tax collections from those making over $50,000 per year climbed by 57 percent between 1963 and 1966, while tax collections from those earning below $50,000 rose 11 percent. As a result, the rich saw their portion of the income tax burden climb from 11.6 percent to 15.1 percent.7

 

.................

 

The 1980s

 

President Reagan presided over two major pieces of tax legislation which together reduced the top tax rate from 70 percent in 1980 to 28 percent by 1988.

 

The economic effects of the Reagan tax cuts were dramatic. When Reagan took office in 1981, the economy was being choked by high inflation and was in the middle of a double-dip recession (1980 and 1982). The tax cuts helped pull the economy out of the doldrums and ushered in the longest period of peacetime economic growth in America's history. During the seven-year Reagan boom, economic growth averaged almost 4 percent.

 

There are many other interesting facts in that report, I'd advise checking it out, as well as the second one.

People on this board complain about how so many threads are simply attacking one side or the other, but when people give actual data and have a legitimate debate, people ignore th thread. Go figure

People on this board complain about how so many threads are simply attacking one side or the other, but when people give actual data and have a legitimate debate, people ignore th thread. Go figure

 

Had it happen to me more than once as well. I'm glad someone else feels like a thread killer. :lol:

Well, just so you know, some of us are reading and injesting the information provided! :thumb:

cch5432,

 

There seems to be conflicting information on the web about the effects of tax cuts on federal revenue (go figure). I found this:

 

CLAIM THAT TAX CUTS “PAY FOR THEMSELVES” IS TOO GOOD TO BE TRUE:

Data Show No “Free Lunch” Here

 

and this:

 

Supply-side Spin

 

Now, the first paper is posted on the website of the Center on Budget and Policy Priorities, which I think is a left-leaning think tank. But it just goes to show that there are arguments being made (with data) on both sides of this argument.

 

Here is the Summary excerpted from the second paper:

 

Republican presidential candidate Sen. John McCain has said that the major tax cuts passed in 2001 and 2003 have "increased revenues." He also said that tax cuts in general increase revenues. That’s highly misleading.

 

In fact, the last half-dozen years have shown us that we can't have both lower taxes and fatter government coffers. The Congressional Budget Office, the Treasury Department, the Joint Committee on Taxation, the White House’s Council of Economic Advisers and a former Bush administration economist all say that tax cuts lead to revenues that are lower than they otherwise would have been – even if they spur some economic growth. And federal revenues actually declined at the beginning of this decade before rebounding. The growth in the past three years that McCain refers to brings revenues back in line with the 40-year historical average as a percentage of gross domestic product.

 

It’s unclear how much of the growth can be attributed to the tax cuts. Capital gains tax receipts did increase greatly from 2003 to 2006, but the CBO estimates that they will level off and decrease in the next few years. The growth overwhelmingly resulted from a sharp rise in corporate tax receipts, the cause of which is a topic of debate.

 

It seems that the subject of the federal revenue-effect of the 2001 Bush tax cuts is a matter of considerable debate, with many appointed government officials and even a former Bush economic advisor stating on the record that tax revenues would have been higher without the cuts. Few are suggesting that tax cuts don't spur economic growth, but many question whether the level of growth is large enough to actually boost revenues and thus "pay for the tax cut".

 

I think the answer is not clear cut and can't be distilled into simple notions like 'tax cuts boost revenues'. That is a gross simplification in my eyes. Obviously, there exists a point on the tax rate spectrum where you will absolutely reduce revenue if you cut taxes. For example, I doubt anyone would suggest that if you cut taxes to zero, federal tax revenues would rise. That is an impossibility. On the other hand, there probably is a tax rate high enough to choke economic growth to the point where an increase in the rate would actually reduce tax revenue. The question is, where are those points? I'm not willing to take on blind faith that any tax cut will automatically result in higher revenues.

cch5432,

 

There seems to be conflicting information on the web about the effects of tax cuts on federal revenue (go figure). I found this:

 

CLAIM THAT TAX CUTS “PAY FOR THEMSELVES” IS TOO GOOD TO BE TRUE:

Data Show No “Free Lunch” Here

 

and this:

 

Supply-side Spin

 

Now, the first paper is posted on the website of the Center on Budget and Policy Priorities, which I think is a left-leaning think tank. But it just goes to show that there are arguments being made (with data) on both sides of this argument.

 

Here is the Summary excerpted from the second paper:

 

 

 

It seems that the subject of the federal revenue-effect of the 2001 Bush tax cuts is a matter of considerable debate, with many appointed government officials and even a former Bush economic advisor stating on the record that tax revenues would have been higher without the cuts. Few are suggesting that tax cuts don't spur economic growth, but many question whether the level of growth is large enough to actually boost revenues and thus "pay for the tax cut".

 

I think the answer is not clear cut and can't be distilled into simple notions like 'tax cuts boost revenues'. That is a gross simplification in my eyes. Obviously, there exists a point on the tax rate spectrum where you will absolutely reduce revenue if you cut taxes. For example, I doubt anyone would suggest that if you cut taxes to zero, federal tax revenues would rise. That is an impossibility. On the other hand, there probably is a tax rate high enough to choke economic growth to the point where an increase in the rate would actually reduce tax revenue. The question is, where are those points? I'm not willing to take on blind faith that any tax cut will automatically result in higher revenues.

Well, I guess it comes down to matter of opinion of "at what point" do tax cuts result in higher revenues. I know that the overwhelming of majority of economists believe that we need tax cuts now (who knows if, in the event that those tax cuts are enacted they would eventually switch positions), so I will go on their opinions.

 

Either way, we have gotten off topic (it was of my doing) because we are focusing on tax revenues and tax cuts. Aces' original claim was that tax cuts boost the economy, which the latter part of my post (#35) did in fact validate.

Well, I guess it comes down to matter of opinion of "at what point" do tax cuts result in higher revenues. I know that the overwhelming of majority of economists believe that we need tax cuts now (who knows if, in the event that those tax cuts are enacted they would eventually switch positions), so I will go on their opinions.

 

 

 

Find me evidence (link please) of this overwhelming majority of economists who believe we need tax cuts so disproportionately skewed toward the super rich (McCain's proposal). I don't think you'll be able to do it. And please don't rely on the Heritage Foundation. If the overwhelming majority of economists feel this way, you should have no trouble producing quotes from a wide range of nonpartisan sources.

:lol: You post a link to what you described as a "left-leaning think tank" and then ask cch5432 not to post a response containing any study from the conservative think tank, Heritiage Foundation!? Why not just give him a list of acceptable "left-leaning think tanks?" :lol:

 

From Remembering the real economic legacy of JFK

 

Let's set the record straight on the similarities between the Kennedy and Bush tax cut programs. In 1962, President Kennedy sponsored legislation to cut income tax rates by 20%. He also proposed a 10% reduction in corporate income taxes to spur economic growth and job creation. (Even then-freshman Sen. Ted Kennedy voted for that tax cut.) The cuts were an unparalleled economic success. Total national employment grew by more than one million jobs in the next four years. The economic growth rate climbed from 4.3% to 6.6%.

 

The cuts also generated increased revenues, which helped balance the budget. Total income tax receipts grew from $48.7 billion in 1964 to $68.7 billion by 1968. This was a faster rate of revenue growth than had been achieved in the five years before the tax cuts. This was just as President Kennedy had predicted. In his 1963 speech to the Economics Club of New York, he declared:

 

"It is a paradoxical truth that tax rates are too high today and tax revenues are too low. . . . An economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs or enough profits."

(I hope that you do not mind me quoting the Club for Growth president.)

Find me evidence (link please) of this overwhelming majority of economists who believe we need tax cuts so disproportionately skewed toward the super rich (McCain's proposal). I don't think you'll be able to do it. And please don't rely on the Heritage Foundation. If the overwhelming majority of economists feel this way, you should have no trouble producing quotes from a wide range of nonpartisan sources.

I don't feel like finding links.

 

I know that tax cuts for everyone (including the rich) only help the economy. It is backed by economic theory. You know it as well as I do. Taxing the rich sounds good and wins votes but it is the rich who spur economic growth. I don't believe in giving the rich more tax breaks than anyone, just equality.

:lol: You post a link to what you described as a "left-leaning think tank" and then ask cch5432 not to post a response containing any study from the conservative think tank, Heritiage Foundation!? Why not just give him a list of acceptable "left-leaning think tanks?" :lol:

 

No, if you'd been paying attention to the entire flow of this thread, I first posted (see post 32) real budget data from official sources showing that there is no coherent evidence of higher GDP growth with a lower top bracket income tax rate. That, I believe was your claim. And it was not supported by the data (for example, we actually had higher annual GDP growth in the 1970's with 70% top tax bracket than we have had from 1987 to present with a 36.8% top tax bracket). Then, there was a drivelling response about how the economy cannot continue to grow "exponentially" (a term which has a specific mathematical meaning, but which is misused constantly in contemporary language) which was quite frankly inadeqate to refute the GDP growth rate data. Then, cch5432 posted several bits of analysis from the Heritage Foundation, as a position in favor of further cuts to the top tax bracket. And I found a few links making contrasting claims, not necessarily embracing them, but simply to show that there are widely varying views on the subject. Some (and you know who you are) have been so bold as to claim that it should by now be common knowledge that tax cuts boost revenues as a general rule and that economists are in widespread agreement on this. That agreement is simply not the case and I pointed that out with one (admittedly) left-leaning paper. By the way, the second link I provided was to FactCheck.org, a nonpartisan site, but I'm sure you'll tell us that the parent organization, the Annenberg Foundation, received a large donation from George Soros' cousin's neighbor's uncle's dog.

 

Now pay attention, the latest claim that is being made (post #40) is that the overwhelming majority of economists believe we need tax cuts now with the implication being that we need the McCain tax cuts now. I would like to see a link documenting this near consensus among economists, AND I asked for this to not be from a partisan source (such as the Heritage Foundation) since it should be easy to find such evidence of such overwhelming agreement (if it exists) from an abundance of nonpartisan sources.

 

If you can provide this information, I'll be happy to read it. Otherwise, I'll wait for CCH5432's response.

I don't feel like finding links.

 

I know that tax cuts for everyone (including the rich) only help the economy. It is backed by economic theory. You know it as well as I do. Taxing the rich sounds good and wins votes but it is the rich who spur economic growth. I don't believe in giving the rich more tax breaks than anyone, just equality.

 

 

Sure, give people more money and I'm sure it will help the economy to a degree. I'm not interested in helping the economy if the downside is that the tax cut is funded by deficit spending. The 2001 Bush tax cuts (what is at issue here) did not pay for themselves. Here is a quote from Alan Viard, a former George W. Bush economic advisor and Treasury Dept who is currently with the conservative American Enterprise Institute:

 

Federal revenue is lower today than it would have been without the [2001 and 2003] tax cuts...among economists, there’s no dispute. Tax cuts can be a sound economic move that spurs growth, but it doesn’t mean that [the cuts] gained revenue.

 

I have read quotes from plenty of economists who do not support the idea of deficit-funded tax cuts. I don't think you would find much support for this idea among economists (certainly not overwhelming support) because they know that a deficit-funded tax cut is the same as a future tax increase.