FWIIW, the CBO has been dead wrong with virtually every estimate they have ever made about the economy!
The reason is they use "static" scoring for proposed changes in the tax code vice "dynamic" scoring. IOW, they refuse, even after decades of contrary evidence, to take into account personal and corporate taxpayer behavior in the face of tax code changes.
The "conventional wisdom" under the static scoring model is that when the government raises tax rates, revenues increase and when tax rates are lowered, revenue decreases.
They are wrong, of course, and Dr. Laffer is absolutely correct, as has been proven time after time after time.
The sad truth is that the CBO poobahs are tax and spend lieberals, and the Republicans, when afforded an opportunity to replace the CBO old guard in 1994 with FResh intellects schooled in dynamic scoring, blew it, and left the old guard in place.
Which gives you some idea of the magnitude of the problem we are faced with -- not only with the CBO, but also with the Congress!
For example, the static scoring model the CBO uses has resulted in some incredibly wrong-headed conclusions which the LIEberal/Socialist/Marxist Bastards in Congress, on K Street and at the Brookings Institute have used with manifest glee to trash the FairTax.
When you understand that the CBO wields incredible power in the House and Senate re: changes to the tax code, you will begin to appreciate the nature of the beast we are warring against.
Simply put, the CBO can make or break a tax code change, and for that reason, reform minded Congressmen and Senators have been trying to re-staff the CBO since 1994. Without success, I must regretfully add. The lieberal tax and spenders are still in there doing their bit to keep the income tax and the IRS alive.
To this point, they are succeeding.
We have all suffered mightily FRom their "handiwork."
Please read Frank's post #42.
It makes some very important points that are very important for us all to understand about where we are and why we are where we are vis a vis fundamental tax reform.
... and that's why when the SQLers post papers and studies by CBO and/or the workers therefrom the information is worse that meaningless - it is actually quite biased against any significant change in the tax system.
One of the "gleeful warriors" in using this sort of trash trash is Nightie, of course - but there are others.
Your #42 is a great post, my friend.
Every American should have your points explained to them.
Thanks.
Bingeroo! The Wall Street Journal has editorialized on occasion about the improprieties in this tax model.
You simply can't ignore the behavior of taxpayers. But when you think about it, the more the populace is kept in the dark about these things the easier it is for John Kerry to babble about tax cuts for the rich. The sheer prevarications that we hear incessantly in the MSM about taxes are enough for charges of journalistic fraud.
I know people who took long term capital gains as soon as the rate went to 15%. This is an action they wouldn't have taken otherwise: more money for the treasury was the result. If the rate hadn't been cut: zero money for the treasury.
Absolutely correct.....
Dynamic scoring IS the way to go.....but the science is in its infancy. The models must solve simultaneous, non-linear, differential equations at multiple loci to truly model the global economy. Mathematically speaking, it is the same problem that the global climate models must solve. If done well, it is mind-numbingly complex and limited by our current computing capacity.
Here's an interesting paper on the subject: http://www.heritage.org/Research/Taxes/cda04-05.cfm
I am sorry I didn't say that myself re: static vs dynamic scoring. Of course the Dumbocraps use static idiocy to their best advantage, much in the same way they use MOST school teachers to promote their insidious socialist innuendo anti-capitalism.
The Dem simpletons/liars are simply denying to admit they/we have had 3++ historical example cases of tax cuts revving revenues - JFK, RWR, Newt & W. I was in 5th grade when JFK was shot - but in 1980 or so I had heard his speech urging tax cuts to grow the economy. RWR amplified it and I immediately turned into a fiscal conservative. 19 shares of IBM as a graduation present began my avid following of investing and the politics that affect it so greatly.
High taxes cause capital flight and tax evasion by all classes - but the elites always have their outs & we little'uns never had.
Kerry paid 12% on $5 MILLION. The walking PR##K!!
All the marxist "philanthropies" of the left were set up for the express purpose of promoting the socialism/fascism that works to concentrate their wealth even more, and at taxpayer's expense, while at the same time shielding from taxation the vast wealth of those fantastically wealthy dynasts. Rockefeller leaps into mind - the creator of those commies at the CFR.
In 1979-80, at the time RWR was campaigning, I took an econ 101 course and our Prof David Denslow (who I'll never forget) taught us about the Laffer Curve. Simple stuff really - common bell curve - zero tax rate = zero revenue & 100% tax rate likewise (why work?).
Somewhere in between is the tax rate that maximizes revenue at the top of the bell. The Dems have always prefered (x-JFK) to keep tax rates between the optimum and 100%. That way the economic malaise created is used to make us think we need them to enact more laws, protect more industries and RAISE taxes!!!! I hate them to my very core almost to the point of a rampage of bodily harm!! It is SOOOO exasperating!! Arrggghhhh!!
I myself was a longhaired lefty in the late 60's, still libertarian re: ltd Govt, but never have, and never will, vote for the socialist bastard Dems.
Art was on Kudlow today along with a Banker who is refusing to loan developers money where the property was taken by ED NOT for public use but private. A GREAT American he is, Art too. I love him for it.
If anyone thinks Kerry and the rest of the Govt assisted/subsidized/sweetheart super wealthy in Davos are up to any good, guess again my friends.
Eternal: of course income taxation is unconstitutional and we should be working to remove it altogether, but I don't see how to abolish it until Govt is already in serious devolution? What say you?
Norquist thinks it can be halved in one generation - could we do it?