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To: central_va
Receipts were still below pre-tax cut levels in 2003, 2004, and 2005. The fact that we had a tax cut, and a recession is the point: the economy is a lot more complicated than the tax rate. Keeping it real, if you cut the tax rate in you will collect less money. I'm fine with that, I want the government to have less money. But cutting taxes isn't some magic wand that will always give both taxpayers AND the government more money.

Even if you look at the Laffer Curve, there is a point where cutting taxes reduces revenue, and doesn't do anything for growth.


27 posted on 10/26/2017 1:31:56 PM PDT by Wayne07
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To: MrShoop
You are assuming that the current rate of taxation is to the right of the inflections point! That is not true.

Tax revenue increase when the economy is growing rapidly and slows down when the economy is slowing. The tax rates affect that paradigm, they(increases/decrease) do not directly correlate to revenue.

28 posted on 10/26/2017 1:57:50 PM PDT by central_va (I won't be reconstructed and I do not give a damn.)
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To: MrShoop; Swordmaker
Even if you look at the Laffer Curve, there is a point where cutting taxes reduces revenue, and doesn't do anything for growth.
I see the pretty picture with the “Growth Maximizing Point” label. I don’t see any rationale for the existence of a growth maximizing point. Other than to say that growth requires some stability in the value of the currency, and that requires some revenue - and thus, some tax rate.

But, for at least two reasons, I suspect strongly that the real "growth maximizing point” for the capital gains tax in particular is - zilch:

  1. To the extent that the value of a stock grows, that growth in value reflects the prospect of future income. Thus, taxation on the increase in value is taxation on anticipated future income. Income which will in any case be fully taxed when (if) it eventuates, whether or not the stock is sold - and capital gains tax paid - before then. The capital gains tax therefore functions as friction in the market for, and optimal pricing of, stocks. People whose interest would best be served by selling a stock will instead tend to hold it because of the capital gains tax. And,

  2. a lot of capital gains are illusory nominal gains which only reflect that the asset has not declined in value with the decline in value of the dollar due to inflation.

29 posted on 10/26/2017 2:05:22 PM PDT by conservatism_IS_compassion (Presses can be 'associated,' or presses can be independent. Demand independent presses.)
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