Quote:
Originally Posted by dc_dux
ace....the CBO, the Congressional Joint Committee on Taxation, Bush's Council of Economic Advisers all report that the Bush tax cuts resulted in less revenue...they cant "prove" but attribute it primarily to the fact the cuts were heavily weighed towards the "rich" and the "rich" payed less than they would otherwise have paid. (ie what they paid pre-2001).
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The bonus of the "fact check" is that it also debunks the supply side myth.
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I did a GOOGLE search using "CBO tax cuts less revenue". Here is the third item that came up:
Quote:
CBO: Tax Cuts’ Impact Has Faded
The stimulative effect of Bush’s tax cuts has worn off and the supply-side benefits are “small,” the Congressional Budget Office says.
At the request of House Budget Committee Chairman John Spratt (D., S.C.), the CBO analyzed the impact on the economy of the Economic Growth and Taxpayer Relief Act of 2001 (EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), other than through the direct impact on tax revenues.
In a letter to Spratt released Friday, CBO director Peter Orszag said, “The short-term effects of EGTRRA and JGTRRA in stimulating aggregate demand in the economy have largely dissipated by now, and the supply-side effects of those policies are uncertain but are probably small.”
Some of the tax cuts’ provisions “increased incentives for people to work and save (which can increase growth), but other provisions had no effect on incentives. In addition, the two tax laws increased the budget deficit, and doing so tends to reduce economic growth over the medium and long term. At this point in time (several years after enactment), once those various factors have been taken into account, the overall impact of the tax legislation on the economy is likely to be modest,” Orszag wrote.
Orszag concluded that the tax cuts’ indirect impact on economic growth, investment and saving and could affect this year’s budget deficit anywhere from an increase of $3 billion to a reduction of $14 billion, depending on the assumptions used. That is separate from the direct boost to the deficit trhough lost revenue and the added interest on borrowing to cover the gap of $211 billion.
It currently expects this year’s deficit to be between $150 billion and $200 billion, implying that without the tax cuts, the budget would probably be in surplus this year.
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Washington Wire - WSJ.com : CBO: Tax Cuts' Impact Has Faded
This individual seems to say that the impact of the cuts has worn off and the supply side impact small at best. He then says the cuts added to the deficit and gives a range of an increase of $3 billion to a loss of $14 billion dollars depending on the assumptions used. He also has the position that government deficit spending has a negative impact on economic growth. Not very precise is it?
If you recall Hauser's law taxes collected are a factor of GDP growth not marginal tax rates. So, in order for the above to be correct, meaning Bush's tax cuts lead to less taxes collected, you have to make assumptions about the impact the recession had on taxes collected.
I certainly agree that a dividend tax cut will have an initial big short-term impact and then that impact would fade to a baseline level. I also agree that a rebate check would have a big short-term impact and then fade. On the other hand how does the CBO factor the increased cost of gas for the average working man (exports or money out of our economy and the pockets of Americans) with the on-going lower tax rates. Which had a bigger impact on the economy, and to what degree? We need the methodology before buying into the conclusions.