Posted on 06/09/2012 4:07:54 PM PDT by BfloGuy
It’s been the prevailing economic philosophy of the Republican Party since Ronald Reagan was elected president in 1980.
Supply-side economics held that reducing marginal tax rates would spur economic growth, create jobs and even generate tax revenue for the government.
And it makes sense in theory: If people keep more of what they make, they would logically work harder, spend more and hire more people, right?
When you listen to supply-siders like Arthur Laffer, Stephen Moore and Larry Kudlow, they always extol the Kennedy-Johnson tax cut of the 1960s and especially President Reagan’s tax cuts of the 1980s.
But they rarely mention the 1990s or the 2000s.
Maybe that’s because those two decades were almost a perfect controlled experiment that shattered their pet theories: President Bill Clinton raised marginal tax rates and the economy boomed and jobs were plentiful. President George W. Bush cut them and we got only modest job growth.
In fact, there’s more and more evidence suggesting that lowering marginal tax rates doesn’t create many jobs at all.
(Excerpt) Read more at marketwatch.com ...
I’m still waiting for these leftards to explain how trickle-down doesn’t work but stimulus spending does.
Even if one ignores the psychological effects of tax rates, one should consider what rich people do with their money. Generally, they want to use it to make more money, which means that they invest it in things which will generate wealth. Any dollar the government steals from a rich person's pocket is a dollar the rich person won't have to invest in a wealth-generation enterprise.
While it's true that rich people don't feed all of their marginal income into investments and wealth generation, so stealing $1 from someone won't reduce the investment in wealth generation by a full dollar, the percentage of a rich person's marginal income which gets fed into wealth generation is apt to be much higher than the percentage of government money that funds wealth creation.
Taking money from people who would use it to generate more wealth, and giving it to people who will regard it as an encouragement to become more dependent upon government, could not possibly be a recipe for prosperity, even if it had no effect on wealth generators' work ethic. Can anyone offer a plausible explanation of how wealth is supposed to be created if capital is taken from those who would effectively use it to create wealth?
Shouldn’t we put a silver bullet through the heart of Keynesian economics first? It sucks the blood out of the economy.
If the libs want to give Clinton credit for the job boom in the nineties, they’ll also have to credit him for the Nasdaq fiasco which lost about 75% of its valuation. They don’t ever bring that up. Sure, Clinton raised taxes early on, but he apologized for it and under pressure from Republicans in control of Congress, cut cap gains taxes...which cut the deficit. So Clinton acted like a Republican at times, and the economy boomed. If raising taxes was the presciption for a booming economy, then raising tax rates by fifty percent would insure everyone would be a millionaire. Bogus theory.
Mjp is on the right track but its a bit more complicated. The amount of revenue realized from income is primarily determined by the total number of workers paying taxes. The tax rate on income contributes to a workers perception of what their labor is worth. If they can’t take home enough money after taxes based on this perception they won’t accept the job and no tax revenue is generated. This is why we accept the Marxist notion of progressive tax rates. If you can make $250,000 a year you accept a higher rate as long as what you take home for your effort still meets your expectation of worth. At some point the work is “just not worth it” an you either find a way to avoid taxes (cash, barter, tax shelters, deferral) or you don’t do the work. Either way the tax revenue is lost to the government.
The governments main focus should be to create the optimum environment that results in the greatest number of people working for the highest wages based on their productivity. This is best done by minimizing regulation, red tape, and bureaucratic obstacles to business formation. Growing the pie is a win for everybody including the government. Tinkering with tax rates beyond the extremes just contributes to class warfare and envy.
I really like this guys stuff:
http://keithhennessey.com/2010/11/18/president-george-w-bushs-spending-record/
He makes a lot of sense
Its easy to spin economics anyway one wants to
You mean the dot-com bubble. It created a huge unexpected revenue stream to the US government, and when the bubble burst, accumulated losses reduced revenue streams to the US government for years after Bill Clinton was long gone.
You mean the dot-com bubble. It created a huge unexpected revenue stream to the US government, and when the bubble burst, accumulated losses reduced revenue streams to the US government for years after Bill Clinton was long gone.
Debt. In the overall view. Our prosperity has been in large part due to borrowing to pay later. But, later is here and we don't have the money.
So Reagan, grew the economy. He also grew Gov't. We haven't had a President or congress cut debt or spending in our lifetime. Gingrich and crew, did not cut Gov't.
So we have piled up over 15 Trillion in public debt. And this all we have to show for it. That does not even include social security and the other scams. Student loans, housing, the list goes on.
Cutting taxes if fine. But pay for it! One cannot cut taxes and then not cut Gov't! By not cutting Gov't certain individuals now end up with a better private gain, but the load of debt is now put on the backs of the citizen.
I was being sarcastic.
I was being sarcastic. It was like a joke (although, I guess not much like one). :0)
They also ignore the fact that Clinton benefited from the dotcom boom while GW got hit with the one-two punch of the bubble bursting and then 9/11. Nobody would have been surprised if GW’s entire first term was a depression, but his tax cuts created a booming recovery from those early economic setbacks.
Great post.
I was an IT manager and my company was one of those spending millions to migrate to a new Y2K ERP package. We doubled staff internally and doubled again with consultants.
People, travel, and equipment budgets went through the roof. All of those industries benefited from our spending.
No it wasn't.
Tax rates don't mean anything when you wipe out all the hundreds of ways not to pay taxes, and that is what the 86 bill did!!!!
It's true, lots of loopholes were eliminated.
It effectually shut down.....
Yup, sucked to be you.
I don't disagree with the point of your statement, but I don't like saying that we should "pay for" tax cuts. Yes, spending cuts should accompany the tax reductions, but paying for tax cuts implies that the revenue belongs to the government and not us.
Just picking a nit.
Yes, Hennessey's good. I'm glad you mentioned him -- he'd fallen off my favorites list.
Yes, of course. The article's title is tongue-in-cheek.
You're right. I thought the title was so ridiculous that the "barf alert" was implied. But I should have included it.
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