Why did Tax Revenue INCREASE.....AFTER the Bush, Reagan, and JFK Tax Cuts?

Why did Tax Revenue INCREASE........AFTER The Bush, Reagan, and JFK Tax Cuts?

A question that boggles the minds of surprised and unexpected Liberal Economists alike, in every venue where it has been asked......and an answer that defies each and every Democrat economic theory.


The Three Largest Tax Cuts in US History..........

Federal Revenue After The JFK/Johnson Tax Cuts



Federal Revenue After The Reagan Tax Cuts



Federal Revenue After The Bush Tax Cuts


......yielding 3 of the largest periods of economic and revenue growth in US History.

We The People were allowed to keep more of our profits and allowances......and Government still managed to collect more revenue than the wettest of liberal tax hiking wet dreams. Yes tax cuts have demonstrated to be a win-win every time they have been tried, and yet there are those among us who will insist the only way to collect more revenue is to raise taxes....on other people.

Tax Cuts yield Economic Growth....Economic Growth yields Revenue Growth..... everytime its tried.
.
.

 

And yet with all that extra revenue, the debt still went up about $6 Trillion under Bush.

 

So why did Tax Revenue INCREASE.......AFTER the tax cuts?

Shouldnt revenues be plummeting after tax cuts?
.
.

 

Tax cuts can bring increased revenues if properly targeted to the middle class. The increased spending can lead to a lower unemployment rate.

Due to the housing bubble bursting, there was a huge spike in unemployment at the end of Bush's term, which led to lower revenues in spite of tax cuts.

http://data.bls.gov/timeseries/LNS14000000

Of course, you have to be prudent with spending to have a sound economic policy. Under Kennedy, the debt increased only incrementally. Under Reagan, it nearly tripled. Bush doubled the debt.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt.htm

 

Only to a certain extent will you see more revenue from lowering taxes. Look, I want income taxes to be as LOW as possible. But that is because I think the government should be much smaller, and collecting much less revenue.

But when saying that lowering taxes means MORE revenue for the government, that only works to a certain point. There is another point where lower taxes means less revenue for the government. This is what the Laffer curve was trying to show. (Art Laffer was Reagan's economic advisor).

Imagine a curve on a graph. The peak of the curve represents the "sweet spot" where the lowest possible taxation rate meets the highest government revenue rate.

 

Not as simple as you're portraying it though you are right, tax cuts and decreased spending usually increases the growth in the economy so in a stable economy it would create more revenue (as a better economy means more people working so more people paying tax) though my only thing about this is even Reagan had to increase taxes during his second term to make up for some of his budget plan. Though except for that you are generally right though is a little simplistic of the overall fiscal policies.

 

The problem is we don't now have a stable economy. Projections are for slower than average growth with higher than average unemployment. Given those factors and our high debt and annual deficits over $1 Trillion, government must raise more revenue or drastically cut spending below what anyone is willing to do. The only real option is a tax increase of some sort, coupled with less spending.

 

What classes of people dont increase spending when they get to keep and spend more of their own money?
.
.
.

 

Tax cuts are an economic stimulus. Most likely, the tax cuts improved business and personal incomes. That results in more taxes being paid but at a lower rate. It isn't any more complicated than that.

 

....well with 6 trillion dollars of government for a 15 trillion dollar economy....were nowhere near the extent.....not even in the same solar system yet.

Laffer was half right....
.
.

 

Agreed though I don't really put all the blame on the candidates for not lowering spending because telling people that everyone will have to make a sacrifice to help the economy will never work to get you elected anyway tell people we need to cut funding to social programs democratic voters go nuts tell people we need to decrease military spending and republican voters go nuts. Nobody wants to make these decisions but people need to realize until we do we'll be stuck in a debt deadlock until we eventually crash.

 

The general argument is that the wealthy spend no matter the economy so a tax break for the wealthy doesn't stimulate the economy like a middle class tax break does.

The middle class spends more of its income as a % and would spend more if they had the ability to do so. Not so much so for the wealthy.

Consumer demand is what creates jobs and you can't have demand without the middle class having money to spend. If you remember, Bush sent out tax rebate checks in early '08 and told people to 'go spend the money'.

Of course it didn't prevent the recession, but the reason he issued the rebates was to stimulate the economy.

http://usatoday30.usatoday.com/money/perfi/taxes/2008-04-25-tax-rebate-checks_N.htm

 

If we agree that cutting taxes equates economic growth......then we also agree that tax hikes equate economic recession.....

....tax hikes are not the answer.....3 trillion dollars is more than enough to run a "Limited Government".
.
.
...We have a Spending Problem....thats it....and thats all.
.
.

 

I agree, but we can't have candidates acting like everything's rosy, either. The national dialogue has to change for people to get their minds wrapped around the fact that the gravy days are over for a while.

Though I will be voting for GJ, of the 2 main candidates Obama is at least trying to inject a little reality into his policy proposals while Romney seems to be thinking we can still spend more and tax less with no consequence.

 

Tax cuts can increase revenue, but it all depends on the starting point.

When Reagan decreased taxes in 1980, the starting point was a top tax bracket of 70%. He brought it down to 35%. So, obviously, a lot more productivity resulted from this.

Nowadays, decreasing the top bracket has a much lower return. For starters, the real tax rate for the top bracket is effectively 26 to 28% due to the AMT. Officially, people in the top bracket are liable for 33%, but they can deduct down to whatever AMT rate applies to them.

Back when the nominal rate was 70%, people could still deduct down to the AMT, but generally speaking, only the ultrawealthy could do that. For obvious reasons, getting enough deductions together to reduce your effective rate by almost 50% is something that requires a lot of write-offs.

So, tax cuts don't mean as much now -- at least for the top bracket. Nowadays, increasing revenue is better served by limiting deductions more.

 

With taxes, the devil is in the details. The same is true of spending cuts.

On the face of it, yes we agree. Given that no one is willing to make steep enough cuts to alone eliminate the deficit, we're only left with increasing revenue to at least some degree with some spending cuts. We simply cannot afford a higher debt. Last year we spent over $450 Billion just in interest on that debt and that is with artificially low interest rates. The Fed can't keep a lid on interest rates forever and when they do rise we will be spending much more on that interest annually.

We not only have to balance our budget, but have some surplus to at least start paying down the debt or interest payments are going to kill us. We can't count on 'growing' our way out of this, so now we have to face the hard fact that we actually have to pay our way out of this mess.

 

I have yet to ever see that demonstrated in Reality.....

What are you currently Demanding?

How are you conveying that Demand to Job Creators?
.
.

 

First off, I reject the notion that it is the wealthy that are job creators. Sure, it's the wealthy that build most of the stores and plants that provide jobs, but it's consumer demand that creates the jobs. Without that demand, there would be no need to build stores and manufacturing plants.

I'm not sure how I could 'demand' anything of the real job creators as that is all of us collectively.

 

It's more like bad math being used to deceive you into thinking something when it's not entirely true.

http://www.econdataus.com/taxcuts.html

Very good points, some of the data you show also includes Social Security Taxes that actually went up a bit, and when coupled with a recovering economy gives it the appearance of increased tax revenue, when if taxes had not been cut revenues would have been much higher, and we likely wouldn't be in these devastating deficit straights.

Stop the lying. You are just regurgitating the simplistic half truths that the trickle down guys have been spouting for years. There are too many variables to just plop a couple basic charts onto a web forum and claim you are right.

 

There could be no greater growth in revenue.....than putting 25 million americans back to work and paying taxes.......

....considering tax cuts increase job growth everytime they are tried.....now is the best time to cut taxes.
.
.

 

In all my years as an employee....I never worked for a poor person.

In all my years as an employer....I never had a poor person buy my goods or services.

Well you said Consumer Demand creates jobs.......so what are you Demanding?

....because Im betting with 99.99% of everything you ever bought.....your Demand wasnt realized until you were at the checkout.....in which case I would like to welcome you to Supply Side/The Real World.
.
.

 

Are the Facts lying in all three cases?

The three largest tax cuts in US history....resulted in three of the largest periods of economic growth and revenue growth in history.....

.......if you want to rack it up to coincidence.....you can, as that was expected.
.
.

 

Are the Facts lying in all three cases?

The three largest tax cuts in US history....resulted in three of the largest periods of economic growth and revenue growth in history.....

.......if you want to rack it up to coincidence.....you can, as that was expected.
.
.

 

The law of diminishing returns applies to tax cuts just like it applies to everything else.

Again, the starting point is a lot of what determines the growth spurred by a cut.

Reducing the top tax bracket by 10% now wouldn't spur that much growth, because the top bracket is 33%. It spurred a lot of growth when going from 70 down to 35. That's a pretty drastic change, and again, the AMT figured into the equation differently from the way it does now.

It's not really taxation or regulation that has slowed our growth in the current economy. It has more to do with debt, liquidity, and the global business cycle.

Reforming deductions, cutting government spending, and better educating our workforce would do a lot more to spur growth today than any tax cut.

 

Unemployment Rate after The JFK Tax Cuts



Unemployment Rate after The Reagan Tax Cuts



Unemployment Rate after The Bush Tax Cuts