CBO Reports RECORD SURPLUS After Tax Cuts

[Zippyjuan]

https://www.forbes.com/sites/mikepat.../#5e42fc564bf2

"Top marginal rate" does not effect many people. In 1961 (the first year on that chart) the rate applied to 0.00235% of the population (and only to the amounts of their income above a certain level). It is not a good basis for trying to see how much taxes were cut.

https://taxfoundation.org/some-historical-tax-stats/

The top marginal tax rate in 1960 was 91%, which applied to income over $200,000 (for single filers) or $400,000 (for married filers) – thresholds which correspond to approximately $1.5 million and $3 million, respectively, in today’s dollars. Approximately 0.00235% of households had income taxed at the top rate.

[Zippyjuan]

https://www.brookings.edu/blog/up-fr...gans-tax-cuts/

Q. Did the 1981 Reagan tax cut spur enough economic growth that it paid for itself?
A. When Ronald Reagan arrived in Washington in 1981, circumstances were very different than they are today. Inflation was nearly 10 percent. The Federal Reserve had pushed interest rates into double digits. The federal debt was about half what it is today, measured as a share of the economy. The Reagan tax cut was huge. The top rate fell from 70 percent to 50 percent. The tax cut didn’t pay for itself. According to later Treasury estimates, it reduced federal revenues by about 9 percent in the first couple of years. In fact, most of the top Reagan administration officials didn’t think the tax cut would pay for itself. They were counting on spending cuts to avoid blowing up the deficit. But they never materialized.

Q. So the spending cuts never materialized, the deficit increased, and then what?

A. As projections for the deficit worsened, it became clear that the 1981 tax cut was too big. So with Reagan’s signature, Congress undid a good chunk of the 1981 tax cut by raising taxes a lot in 1982, 1983, 1984 and 1987. George H.W. Bush signed another tax increase in 1990 and Bill Clinton did the same in 1993. One lesson from that history: When tax cuts are really too big to be sustainable, they’re often followed by tax increases.

[enhanced_deficit]

Balanced Budget Amendment or GTFO.

In terms of messaging, current GOP team doesn't seem to capitalize on such things as Dems did.









What happeened, Isreal-Palestine conflict fallout balooned military spending and killed debt free projections?

Today Debt is how many $Trillions?

[TheCount]

What happeened, Isreal-Palestine conflict fallout balooned military spending and killed debt free projections?

We decided that we needed a couple of decades-long wars, plus some smaller wars on the side.

[Zippyjuan]

We decided that we needed a couple of decades-long wars, plus some smaller wars on the side.

Bush tax cuts combined with starting major wars in Afghanistan and Iraq. Bush wanted to "return the money to the (rich) people".

[Zippyjuan]

https://www.reuters.com/article/usa-...-idUSL1N1TE1MB

U.S. government posts $147 billion deficit in May

WASHINGTON, June 12 (Reuters) - The U.S. government had a $147 billion budget deficit in May, an increase of 66 percent from the same month last year as the ledger took a hit from declining revenue and higher spending, according to Treasury Department data released on Tuesday.

Treasury reported a budget deficit of $88 billion in the same month last year, the department’s monthly budget statement showed.

Economists polled by Reuters had forecast the Treasury recording a $144 billion deficit in May.

When accounting for calendar adjustments, the government’s deficit was $131 billion compared to an adjusted deficit of $88 billion in the same month in the previous year.

Economists caution that the Trump administration’s corporate and individual tax cuts along with an increase in government spending will drive up the country’s deficit despite a robust economy in which the unemployment rate has fallen to an 18-year low.

More at link.

[Madison320]

I've had a habit of checking the total debt for many years. One thing I've learned is that the numbers jump around a lot. The debt will barely grow for awhile, then it'll balloon like crazy. You almost have to look at it annually for it to make sense. We've been stuck at 20.1 T for a couple months but I expect by the end of the year it'll be pushing 21T.

Democrats think lowering taxes always lowers revenue and republicans always thinks lowering taxes raises revenue. Both sides have it wrong. We're close to the peak of the laffer curve so it won't make much difference whether we lower or raise taxes. The real problem is the spending and Trump is increasing that like crazy.

You know what's funny? I can always predict when Zippy and TheCount will reply to a thread. Anytime someone makes an easily refuted false claim in favor of republicans or against democrats, BOOM, like stink on poop, here comes Zippy and TheCount!

[Zippyjuan]

I've had a habit of checking the total debt for many years. One thing I've learned is that the numbers jump around a lot. The debt will barely grow for awhile, then it'll balloon like crazy. You almost have to look at it annually for it to make sense. We've been stuck at 20.1 T for a couple months but I expect by the end of the year it'll be pushing 21T.

Democrats think lowering taxes always lowers revenue and republicans always thinks lowering taxes raises revenue. Both sides have it wrong. We're close to the peak of the laffer curve so it won't make much difference whether we lower or raise taxes. The real problem is the spending and Trump is increasing that like crazy.

Revenues and even spending do vary from month to month. April is a a high revenue month due to people paying income taxes then. Compared to last year, the May figures for the deficit was up 66%- a big increase.

But do tax cuts lead to higher revenues? Short term, they definitely reduce them. Any economic stimulus of growing the economy- adding jobs which expands the tax base- takes a very long time to show up. It also depends on what people do with their tax cuts. If cuts are spend on goods and services, the economy can grow- people buy stuff so the stores need to order more goods from producers who need to hire more people to produce more. That happens if most of the tax cuts go to those at lower incomes since they spend more of their income on goods and services. If you cut taxes for the wealthy, they are not likely to increase their spending on goods and services so will not create more jobs. If Bill Gates gets another $100 million from tax cuts, he won't go buy more things. Give a million poor people another $100 and they will go to the stores and spend it.

Trump cuts (like Bush cuts) went mostly to the wealthy so will have limited impact on stimulating the economy and expanding the tax base and thus tax revenues.

Do you end up higher than if the tax cuts never happened? What percent of that growth was due to the tax cuts and what percent due to other factors?

[angelatc]

Bush tax cuts combined with starting major wars in Afghanistan and Iraq. Bush wanted to "return the money to the (rich) people".

I'll give you Iraq, but there's no realistic scenario in which we were not going to war with somebody after 9/11.

[Madison320]

Revenues and even spending do vary from month to month. April is a a high revenue month due to people paying income taxes then. Compared to last year, the May figures for the deficit was up 66%- a big increase.

But do tax cuts lead to higher revenues? Short term, they definitely reduce them. Any economic stimulus of growing the economy- adding jobs which expands the tax base- takes a very long time to show up. It also depends on what people do with their tax cuts. If cuts are spend on goods and services, the economy can grow- people buy stuff so the stores need to order more goods from producers who need to hire more people to produce more. That happens if most of the tax cuts go to those at lower incomes since they spend more of their income on goods and services. If you cut taxes for the wealthy, they are not likely to increase their spending on goods and services so will not create more jobs. If Bill Gates gets another $100 million from tax cuts, he won't go buy more things. Give a million poor people another $100 and they will go to the stores and spend it.

Trump cuts (like Bush cuts) went mostly to the wealthy so will have limited impact on stimulating the economy and expanding the tax base and thus tax revenues.

Do you end up higher than if the tax cuts never happened? What percent of that growth was due to the tax cuts and what percent due to other factors?

I agree that in the short term tax cuts tend to reduce revenues. In the long run it depends on where you are on the laffer curve (all things being equal).

You're totally wrong about tax cuts for the wealthy. Tax cuts for the wealthy is the main driver of economic growth. Poor people spending money does not grow the economy. Rich people investing in production is what grows the economy.

[Zippyjuan]

I agree that in the short term tax cuts tend to reduce revenues. In the long run it depends on where you are on the laffer curve (all things being equal).

You're totally wrong about tax cuts for the wealthy. Tax cuts for the wealthy is the main driver of economic growth. Poor people spending money does not grow the economy. Rich people investing in production is what grows the economy.

So growth comes from not from demand but from investment. If Ford Motor Company doubled the amount of cars they produce, would that would grow the economy- even if nobody could afford to buy any of those cars and they sat on sales lots? On the other hand, if people are buying more cars from Ford, they will start making more cars. You need both investment and demand. But without demand, the investment is wasted and produces nothing.

If Bill Gates took his $100 million and bought Ford stock shares, how many jobs would that create? His broker will be delighted with the commission but won't add any jobs anywhere. If people bought $100 million worth of Ford cars, how many jobs would that create? Which has the bigger impact on jobs and hence tax revenues?

[Madison320]

So growth comes from not from demand but from investment. If Ford Motor Company doubled the amount of cars they produce, would that would grow the economy- even if nobody could afford to buy any of those cars and they sat on sales lots? On the other hand, if people are buying more cars from Ford, they will start making more cars. You need both investment and demand. But without demand, the investment is wasted and produces nothing. If Bill Gates took his $100 million and bought Ford stock shares, how many jobs would that create? If people bought $100 million worth of Ford cars, how many jobs would that create? Which has the bigger impact on jobs and hence tax revenues?

Investment grows the economy, not trading stocks. Demand is infinite. If Bill Gates invested 100 million in a super efficient car factory, that made super cheap cars, people would buy them.

If we stole 100 million from Bill Gates and passed it out to poor people, would it grow the economy more than allowing Gates to keep his money?

[Zippyjuan]

Investment grows the economy, not trading stocks. Demand is infinite. If Bill Gates invested 100 million in a super efficient car factory, that made super cheap cars, people would buy them.

So Ford can make an infinite amount of cars and sell all of them. Why don't they? Because demand isn't infinite? Because there are limits on how many they can sell? Ford adjusts their output based on how much they expect to be able to sell- not based on how many they can produce.

Infinite demand assumes people have infinite resources to buy things with. But incomes are limited so people have to limit what they buy. If you give them more money, then they can increase their demand/ purchasing. Then producers will increase their output to fulfill that increased demand.

If we stole 100 million from Bill Gates and passed it out to poor people, would it grow the economy more than allowing Gates to keep his money?

If your goal is to add more jobs, yes. Money being spent creates more jobs than money sitting around in a bank or stocks. Is it proper to take $100 million from Bill Gates is a separate question.

[oyarde]

I paid $20 more this year.

No change for me.

[juleswin]

So Ford can make an infinite amount of cars and sell all of them. Why don't they? Because demand isn't infinite? Because there are limits on how many they can sell? Ford adjusts their output based on how much they expect to be able to sell- not based on how many they can produce.

Infinite demand assumes people have infinite resources to buy things with. But incomes are limited so people have to limit what they buy. If you give them more money, then they can increase their demand/ purchasing. Then producers will increase their output to fulfill that increased demand.



If your goal is to add more jobs, yes. Money being spent creates more jobs than money sitting around in a bank or stocks. Is it proper to take $100 million from Bill Gates is a separate question.

I have always seen this as a chicken vs the egg dilemma. I truly think both are equally important and dependent on each other. The investors and producers cannot sell their good if the consumers do not have the money and the consumers cannot spend their money if there are no producers. So I would be distributing the money back back to both classes if I had to return surplus money from the govt.

No one group is more important than the other.

[Madison320]

So Ford can make an infinite amount of cars and sell all of them. Why don't they? Because demand isn't infinite? Because there are limits on how many they can sell? Ford adjusts their output based on how much they expect to be able to sell- not based on how many they can produce.

Infinite demand assumes people have infinite resources to buy things with. But incomes are limited so people have to limit what they buy. If you give them more money, then they can increase their demand/ purchasing. Then producers will increase their output to fulfill that increased demand.



If your goal is to add more jobs, yes. Money being spent creates more jobs than money sitting around in a bank or stocks. Is it proper to take $100 million from Bill Gates is a separate question.

Raising the standard of living not adding jobs should be the goal. Communist countries have 100% employment but they have to eat dirt. Taking 100 million from Gates and giving it to the poor LOWERS the overall standard of living because the producer (Gates) now has less resources to produce stuff. More stuff = higher standard of living.

[Madison320]

I have always seen this as a chicken vs the egg dilemma. I truly think both are equally important and dependent on each other. The investors and producers cannot sell their good if the consumers do not have the money and the consumers cannot spend their money if there are no producers. So I would be distributing the money back back to both classes if I had to return surplus money from the govt.

No one group is more important than the other.

That may be true, if the entire tax burden was on the poor the overall productivity level might be lower. But the fact is that we're nowhere close to that. Currently the most productive pay almost the entire tax bill so any additional wealth redistribution from rich to poor is only going to lower the standard of living even further.

That's why I prefer a flat tax where the law is the same for everyone. I hate laws that only apply to certain minorities.

[Zippyjuan]

Raising the standard of living not adding jobs should be the goal. Communist countries have 100% employment but they have to eat dirt. Taking 100 million from Gates and giving it to the poor LOWERS the overall standard of living because the producer (Gates) now has less resources to produce stuff. More stuff = higher standard of living.

Adding jobs raises the standard of living. Giving Bill Gates another $100 million in tax breaks only raises his standard of living. Giving one million people a $100 tax break raises the standard of living for a lot more people- granted directly not by much but once they take that money to the hardware store to buy some stuff, the hardware store owner has more money to spend at the grocer's and then he has more money to spend... it multiplies through the economy.

You get more bang for the same buck by giving it to poorer people than to rich people.

[Madison320]

Adding jobs raises the standard of living. Giving Bill Gates another $100 million in tax breaks only raises his standard of living. Giving one million people a $100 tax break raises the standard of living for a lot more people- granted directly not by much but once they take that money to the hardware store to buy some stuff, the hardware store owner has more money to spend at the grocer's and then he has more money to spend... it multiplies through the economy.

You get more bang for the same buck by giving it to poorer people than to rich people.

That explains why communist countries have such high standards of living. They take your logic to the extreme.

[Zippyjuan]

That explains why communist countries have such high standards of living. They take your logic to the extreme.

Taking yours to the extreme we should give all the money we have to the already rich and everybody will be better off. When the top one percent have all of the money and the rest none, the standard of living will be amazing.

[Madison320]

Taking yours to the extreme we should give all the money we have to the already rich and everybody will be better off. When the top one percent have all of the money and the rest none, the standard of living will be amazing.

No, my extreme would be that everyone gets to keep their own money. Taking everything from one group and giving it to another is your idea. And your idea fails because there's no incentive to produce since it's just going to get stolen from you anyway.

[angelatc]

No, my extreme would be that everyone gets to keep their own money. Taking everything from one group and giving it to another is your idea. And your idea fails because there's no incentive to produce since it's just going to get stolen from you anyway.

North Korea is the only country I know of that doesn't tax income.

[juleswin]

North Korea is the only country I know of that doesn't tax income.

Saudi Arabia also doesn't tax income at least for foreign workers.

[Zippyjuan]

North Korea is the only country I know of that doesn't tax income.

They will still find other ways of taxing you. They need money to fund their government.

http://www.nationsencyclopedia.com/A...-TAXATION.html

All direct taxes were abolished in 1974; the DPRK thus became the first country in the world to abolish income taxes collected from its citizens. As a result, the population is dependent on the government for many services. The government collects a percentage (turnover tax) on all transactions between producers and state marketing agencies. Fees are charged to farmers for seeds, fertilizer, irrigation water, and equipment. Consumers pay a tax for the use of water and certain other household amenities. The tax on collective farms is 15% of the harvest, paid in kind. Refugees from North Korea report that a similar in-kind tax was being assessed on the private plots that proliferated during the 1990s, but there is no official confirmation of this assessment.

All foreign-invested enterprises are subject to income, property, turnover, and local taxes. In the four special economic zones established by the government, one in 1991 and three in 2002, the tax on profits for most enterprises is set at 14%; for enterprises involving high technology, infrastructure construction, or light industry, the tax rate is 10%. Resident aliens in the DPRK must pay personal income taxes; the rate varies from 4% to a top rate of 20%.

https://www.fool.com/investing/gener...ome-taxes.aspx

In no particular order, the 10 countries with no income taxes are:

United Arab Emirates
Oman
Bahrain
Qatar
Saudi Arabia
Kuwait
Bermuda
Cayman Islands
The Bahamas
Brunei

Notice a trend?
With the exception of Brunei in Asia, this entire list of income-tax free countries is dominated by Middle Eastern or tropical tourist destinations that rely on essentially two factors to help generate revenue. For the six Middle Eastern countries and Brunei, it's oil and natural gas deposits that contribute to a significant portion GDP, while the Bahamas, the Cayman Islands, and Bermuda rely on tourism and the extremely high living costs to drive wealthy individuals into their country.

In many cases, however, oil and gas revenue and tourism aren't enough to keep the economic hamster on its wheel. Although these countries don't directly tax their citizens with an income tax, there are other forms of revenue collection.

Many countries, for instance, require citizens to contribute to a national social security fund while also requiring employers to make contributions on behalf of their employees. You'll find this practice in place in Kuwait, Oman, the Bahamas, Saudi Arabia, and the United Arab Emirates, just to name a few.

[juleswin]

They will still find other ways of taxing you. They need money to fund their government.

http://www.nationsencyclopedia.com/A...-TAXATION.html



https://www.fool.com/investing/gener...ome-taxes.aspx

And its not just the fact that there is no income tax but they also have a very generous welfare system. free post secondary education, healthcare, housing etc etc. Thanks the fact that they socialized their oil wealth. I know some people would prefer that some individual had taken over said oil fields and enrich themselves with it.

And yes, I get the irony that even with it being socialized, the majority of the people making the most benefit from oil are well connected govt officials.

[Madison320]

North Korea is the only country I know of that doesn't tax income.

Yeah, because there's no income to tax!

[angelatc]

Yeah, because there's no income to tax!

No, it's a little more complicated than that. But I hope that capitalism slips in and the government leaves it like that.

[TheCount]

Thanks the fact that they socialized their oil wealth.

'Their' oil wealth? Who is they and how did they come to collectively own all of the oil?

[juleswin]

'Their' oil wealth? Who is they and how did they come to collectively own all of the oil?

Good question. It is just happened to be that way and trying to take away from the collective will surely lead to a bloody war. So things remain they way they are

[Madison320]

And its not just the fact that there is no income tax but they also have a very generous welfare system. free post secondary education, healthcare, housing etc etc. Thanks the fact that they socialized their oil wealth. I know some people would prefer that some individual had taken over said oil fields and enrich themselves with it.

In a capitalist society individuals don't "take over oil fields", they buy them voluntarily. It's only when things get "socialized" that property is stolen from the rightful owner.