Bush tax.

[Assasin]

I think Obama should use it on the republicans. He should tell them either they accept his option or let it expire. Don't let them win that debate, Tell them that it is too costly for the deficits.

He cannot throw his supporters under the bus, who do not like the tax cut for the wealthy under the bus. The bus tax cut never stopped the recession and didn't work, it gave up more deficits. I hope Obama take a stand.

[HL]

That seems to be his weakness Assasin; Obama is not resolute.

[Islandman]

I don't think the analysis of tax cuts can be as simple as "it never stopped the recession". A recession is not usually caused or prevented by tax cuts or tax increases.

When the Bush tax cuts were implemented, federal tax revenues increased. Hence it is difficult to argue that they did not work at the time they were implemented. However the federal govt also increased thier spending by an even larger amount and that is what caused the deficit to increase.

The tax problem the federal government has had since the Clinton era came to an end is one of too much SPENDING, not too little tax revenue. Its probably the only thing I agree with the Tea Party types on, although I disagree with thier approach to resolving it.

[Assasin]

Tax increased?? by what percentage I-man? The amount in tax cut that was given dwarfed that little increase you are talking bout if memory served me right.

Tax collection also increased in the Clinton's years yet there was no massive tax cut. I can't see the big benefit of the tax cut to especially to the wealthy. With a bigger deficit right now as Greenspan say it can send the bond market in shock and a that time we a go "fennae".

[Islandman]

I do not understand what your point is. I stated that federal revenues increased after the 2003 Bush tax cuts were implemented. This does not necessarily mean that the Bush tax cuts were totally responsible, but it is not logical to say that they increased the deficit or "did not work".

There are many charts which show this but if you want me to find one well here it is:

http://i1016.photobucket.com/albums/...9_333071_3.png




Wether they should or should not expire now is a separate debate. Once again though, the primary issue should not be about what the tax rate is for the wealthy or the middle class , it should be about what tax rates will maximize tax revenue. That is not as easy a question to answer as you seem to think. There is a point where increasing tax rates results in reduced tax revenue but it is very difficult (if not impossible) to determine where that point is and it will vary depending on what is happening in the economy.

BTW the deficit can be lowered by reducing spending OR by increasing tax revenue (not necessarily tax rates)

[Assasin]

the expiration of the the bush tax is acutally increasing revenue.
Yes there has to be spending cuts but there has to be more than just spending cut, ans we have to start somewhere.

The republicans are only interested in cuts, no increase and no other real solution is on the board from them.

Again there is no evidence in my book that the Bush Tax cut worked. It was passed to actually help with "improve growth and taxes in the long term" It didn't so it is time to find other solutions.

[Islandman]

"The expiration of the the bush tax is acutally increasing revenue"

Have they expired yet? How do you come to this conclusion?

I show you a chart that shows tax revenue increasing after the tax cuts right up until the financial crisis (which was a totally separate issue) and you say there is no evidence. Then you say that tax cuts which have not expired yet are already increasing revenue.

It seems as if you already have decided what you want to believe and will ignore any evidence that shows otherwise. No wonder they say politics is just another form of religion.

[Hortical]

The words of the day is to cut spending, but for the FY 2010 budget only 13% is discretionary funding? The wingnut teaparty republicans have not given any specifics on what they would like to be slashed, besides earmarks.

[Islandman]

On that I agree. They are just using buzz words about spending cuts but but don't want to get caught saying WHAT they are going to cut. Its all politics. .

I am not necessarily against some aspects of the tax cuts expiring, the world is a different place now than it was in 2003. What I have a problem with is statements like "the tax cuts increased the deficit" , with the implication that tax revenues went down after the tax rates were cut , THEY DID NOT , they went up!

If people can understand that cutting the price of a product can lead to an increase in total sales revenue UP TO A POINT, then I do not understand why it is so hard to grasp that cutting the tax rate can lead to an increase in tax revenue UP TO A POINT.

At the time the Bush tax cuts were implemented they did the job they were supposed to and they had an expiration date. As it stands now I would go with Obamas suggestion not to make them permanent but to extend them or at least some aspects of them for 2 years and see what happens.

[Willi]

Its the economic boom that inflated the coffers with increase taxes collected, not the tax cut. That is a spurious connection.

In other words, the collecetion would have been EVEN greater with no tax cut!

[Islandman]

Willi, that was the whole idea behind the tax cut; to spur investments, cause the economy to recover and hence improve the tax revenue.

Your argument about wether collection would be greater without the cut is not provable one way or the other. What we DO know is that it did not cause tax revenues to go down, as most Democrats like to say without any research into what really happened.

Macro-economics is a complicated thing, more art than science if you ask
me. There are intelligent people who have been on both sides of Keynes vs Hayek approach , and at different times one approach has been more popular than the other.

Here is a funny take on it:

http://www.youtube.com/watch?v=d0nERTFo-Sk

[Willi]

Boom preceeded the tax cut and had nutten to do with it.

Dot com bubble that eventrually busted. Driven by Greenspan easy money regime.

[Islandman]

LOL! Easy to say now. I bet if the tax revenues had gone down unoo woulda say the tax cuts had EVERYTHING to do with it. Can't-lose position dat.

Thats like the people who argue for a massive stimulus to help the employment rate. If the rate went down, them would say the stimulus worked, but since the rate stayed high, them say it still worked because it would have been even higher without it. Can't lose!

You cannot argue those positions with certainty. Sorry it just is not that straightforward.

[Assasin]

Explain how we had tax collection growth under Clinton without that tax cut.

I clearly understand what you are saying but in my opinion it is not obvious that it was responsible for that increase in Revenue. Tax cut can be used as a stimilus but for me balancing the budget and not impacting tax cut like the tea party want.

We simply can't afford the deficit which exploded even while we had this tax cut.

[Islandman]

Explain how we had tax collection growth under Clinton without that tax cut.

What is there to explain? Just as how you can have increase sales revenue in some cases by increasing the price of an item, and in some cases by reducing the price? Different situations require different approaches.

I clearly understand what you are saying but in my opinion it is not obvious that it was responsible for that increase in Revenue. Tax cut can be used as a stimilus but for me balancing the budget and not impacting tax cut like the tea party want.

I did not say it was obvious or soley responsible. What I said is that you are WRONG to say that it caused the deficit to increase. The deficit increased because the spending increased by far more than the increased tax revenue.

We simply can't afford the deficit which exploded even while we had this tax cut.

Nobody is disageeeing with that. The disagreement is what caused it and how to fix it.