Did the tax debate just end?
By Matthew G Posted in Taxes — Comments (7) / Email this page » / Leave a comment »
Even the most casual observer of U.S. politics notices that The Debate, whatever The Debate may be, rarely ever ends. Long after the votes are counted, after the Supreme Court issues its decision, after all but the faithful few have ceased to care, The Debate continues.
Except when it doesn't. There have been a precious few times in history when a piece of evidence so incredibly important and indisputably true has been discovered, that rational minds cease to debate the issue. The world is round(ish). Porcupines do not throw their quills at dogs. And raising the tax rate does not raise tax revenues as a percentage of GDP.
Kurt Hauser has ended the tax debate in the U.S.
Or at least he should have, IMVHAPUO, fifteen years ago.
What gives?
Cross-posted from theforvm.org
about other tax-rates changing. Let's say these tax-cuts by themselves would decrease revenue, however the government raises other taxes, and therefore, no revenue is lost. What would be shown on a chart like this is that there was no change to revenue, even though the rate cut was not revenue nuetral.
Let's say you increase sweets and increase the amount you exercise to make up for it, so that your weight stays the same. You could make a chart that showed your increase of sweets and that your weight stayed the same and make the conclusion that increase of sweets does not increase weight gain. You made the mistake because you did not account for the hidden variable of exercise. The effects of this chart could be off because of hidden variables also.
is not accurately labelled. It probably should be Federal income tax revenues vs marginal tax rates, otherwise it would not be comparing related data. COmparing toital federal tax revenues to marginal tax rates wouldn't be sensible, since marginal income tax rates would have no effect on SS taxes or gas taxes.
The WSJ Opinion Page is only showing us the top tax rate because that is of the greatest interest to their readership.
They also omit the massive tax loopholes that existed before Reagan's tax reform. Those pre-1986 top rates were actually much lower because of all the loopholes.
But a hard, fact-based look at how taxes affect revenues and growth is in order. I want very much to believe that cutting taxes won't de-fund the Government...I am looking for data to convince me.
Liberals have two rationales for raising taxes:
1) To increase equity among social classes
2) To fund mor Government projects
If it can be shown that lower taxes give as much revenue to the government as high taxes, one of the legs is kicked out from under the Liberal argument.
But I don't think that this data shows that. It shows tax revenue as a percentage of GDP, not total tax revenue.
And GDP is an especially suspect number to use in this debate because GDP includes Government Spending:
http://en.wikipedia.org/wiki/Gdp
Raising taxes means more Government Spending. More Government spending means more GDP. This causes the two numbers to be highly corrrelated.
I am wrong if Kurt Hauser accounted for this in his data. But I have not been able to find a copy of his original paper.
Ahh! I really wish my Wall Street Journal subscription hadn't run out. Now I have no idea what this post is referring to. :(