Posts tagged Bush tax cuts

Do Any Studies Show that Tax Cuts Pay For Themselves?

38
5 months ago
by Reed Davis in

I con­cluded a prior post on my own blog with the fol­low­ing statement:

As I men­tioned, I have yet to find a sin­gle eco­nomic study that pur­ports to show evi­dence that any income tax cut has ever paid for itself. If any­one who reads this should know of one, please leave a com­ment with a link to that study. Thanks.

I received a cou­ple of replies to that request but nei­ther of them focused on income tax cuts in the United States. One focused on cap­i­tal gains tax cuts and the other focused on coun­tries with rel­a­tively weak tax author­i­ties where tax cuts might increase com­pli­ance (like Rus­sia). In any case, I replied to both. I also have not found an eco­nomic study that shows an income tax cut pay­ing for itself from any other source. How­ever, I am con­tin­u­ing to search for such a study and have posted links to any related infor­ma­tion that I’ve found at this link. I believe that only one of those links is to a study that pur­ports to show a tax cut that paid for itself. It is a paper pub­lished by Laf­fer Asso­ciates titled “The Onslaught From The Left, Part III: The Cap­i­tal Gains Tax”. (more…)

The Fiscal Games

18
5 months ago
by dcpetterson in

I’ve writ­ten about the upcom­ing Con­gres­sional fis­cal chal­lenges sev­eral times before. It’s sort of a tra­di­tion by now. I feel oblig­ated to doc­u­ment the play-​​by-​​play for the cur­rent games so as to keep the story mov­ing along.

Games

Games

We are rapidly approach­ing the Fis­cal Pot­hole. Much has hap­pened in the last two weeks. We’ve got less than four weeks until the dead­line hits. Come the New Year, the Bush-​​era tax cuts expire, the 2011 Debt Ceil­ing cut­throat sequester goes into effect, unem­ploy­ment insur­ance pay­ments run out, the FICA Tax Hol­i­day once comes to another end, the Medicare Doc Fix needs to be fixed again, and the Alter­na­tive Min­i­mum Tax needs its annual goos­ing. To top it off, Amer­ica runs back up against the debt ceil­ing shortly thereafter.

Will we sur­vive this cat­a­stro­phe? Can dis­as­ter be averted? What have the play­ers been doing? Activ­ity comes fast and furi­ous. Who will survive?

Pres­i­dent Obama sub­mit­ted to Con­gress a plan that tack­les all of these issues, quite an ambi­tious achieve­ment. It includes a four tril­lion dol­lar deficit reduc­tion over ten years, extends the Bush tax cuts for every­one in Amer­ica on the first $250,000 of income, extends the pay­roll tax credit and bonus depre­ci­a­tion for busi­ness invest­ment, makes per­ma­nent the Alter­na­tive Min­i­mum Tax and Medicare Doc Fixes, along with another pack­age of rou­tinely expir­ing tax pro­vi­sions — mostly for busi­nesses — known col­lo­qui­ally as tax exten­ders. That’s just the begin­ning. (more…)

Lame Duck Waddling

17
6 months ago
by dcpetterson in

There is a tra­di­tion of Con­gress spend­ing some­where around four to six weeks fin­ish­ing up busi­ness between the time of an elec­tion in Novem­ber and the time a new Con­gress is sworn in the fol­low­ing Jan­u­ary. Some of these lame duck ses­sions are pro­duc­tive, and some are not.

The first thing we’ll be deal­ing with in the upcom­ing lame duck ses­sion is the “fis­cal cliff”. There are three major issues there — the expir­ing Bush tax cuts, the Super­com­mit­tee sequester, and rais­ing the debt ceil­ing. A num­ber of other related ques­tions might also be con­sid­ered — the expir­ing FICA pay­roll tax hol­i­day, extended unem­ploy­ment ben­e­fits, and the annual rit­u­als of alter­ing the Alter­na­tive Min­i­mum Tax and the Medicare “Doc Fix”.

We’ll be told these are vital, urgent, must-​​decide ques­tions, that have to be resolved before Jan­u­ary 1, because that’s when they all kick in. We’ll be fac­ing eco­nomic dis­as­ter, and prob­a­bly another major reces­sion if we don’t act before The End Has Come.

The panic is overblown. Con­gress enacted a con­tin­u­ing res­o­lu­tion that funds the fed­eral gov­ern­ment at cur­rent lev­els through some time in March, so most of these will have lit­tle impact, if any at all, until then. The Trea­sury Depart­ment can engage in var­i­ous account­ing gim­micks to keep things funded for at least another thirty to sixty days past the begin­ning of the year whether the debt limit is raised or not. The mat­ters that would be noticed imme­di­ately by most Amer­i­cans is if the Bush tax cuts and the pay­roll tax hol­i­day expire on sched­ule, when take-​​home takes a notice­able (though hardly crip­pling) hit.

These things all have to be fixed. They don’t have to be fixed in a mood of panic. The actual urgency is a polit­i­cal one — what these things mean to Republicans.

At first blush, it may seem that noth­ing has really changed in Wash­ing­ton after Tuesday’s elec­tion. Barack Obama is still pres­i­dent, Democ­rats still have a major­ity in the Sen­ate, and Repub­li­cans still con­trol the House. In real­ity, the dynamic is rad­i­cally dif­fer­ent. No where is this more obvi­ous than in the mat­ter of the so-​​called “fis­cal cliff” (which is more of a pot hole), wherein Democ­rats now hold all the cards. The altered real­ity will be clear in the Con­gres­sional lame duck ses­sion, and this may well set the mood until the midterms.

(more…)

Getting the Special Treatment

18
9 months ago
by dcpetterson in

Two votes hap­pened in the U.S. Sen­ate last Wednes­day, votes which high­light how Repub­li­cans and Democ­rats feel about tax rates.

Sen­ate Repub­li­cans voted to raise taxes on all Amer­i­cans. Sen­ate Democ­rats voted to avoid rais­ing taxes on all Amer­i­cans. A Democratic-​​sponsored bill that lim­its tax increases was passed, despite Repub­li­can oppo­si­tion. Repub­li­cans are now insist­ing that the bill the Sen­ate passed has no chance in the Republican-​​controlled House. In other words, Repub­li­can votes could force everyone’s taxes to go up.

How in the world will Grover Norquist spin this?

That’s not the most amaz­ing part. Democ­rats have been try­ing to make the argu­ment that Repub­li­cans only care about the super-​​rich. Repub­li­cans have been try­ing to deny this charge. So to demon­strate their posi­tion, Sen­ate Repub­li­cans forced a vote on a bill to lower taxes on the super-​​rich as the quid pro quo for avoid­ing tax increases on every­one, appar­ently not notic­ing that this proves the Democ­rats’ point.

Let’s review how we got into this pecu­liar sit­u­a­tion. (more…)

Mean Girls

97
1 year ago
by dcpetterson in

Remem­ber over last year or two, how Repub­li­cans repeat­edly threat­ened finan­cial dis­as­ter? Like high school drama queens in some teenage soap opera, they man­u­fac­tured one cri­sis after another. We’re on the verge of another series of show­downs. Get your score­cards ready.

Grover Norquist at a political conference in O...
High School Diva

To recap the story so far…

We had the debate over extend­ing the Bush tax cuts at the end of 2010. Repub­li­cans insisted we needed to main­tain those tax cuts, espe­cially for the wealthy, or else in a fit of piqué the spoiled rich kids would pick up their mar­bles and stop cre­at­ing jobs. Part of the deal for extend­ing the cuts included expan­sions of Pell grants for col­lege stu­dents and a tem­po­rary reduced pay­roll tax for America’s work­ing people.

Then, in April of 2011, Amer­ica found itself on the verge of a gov­ern­ment shut­down. 800,000 fed­eral work­ers came within a hair’s breadth of being tem­porar­ily out of work. The spend­ing appro­pri­a­tions finally passed, after an unnec­es­sary soap-​​opera-​​like drama. Then we had the debt ceil­ing debate the fol­low­ing sum­mer. Repub­li­can reluc­tance to raise the debt limit to finance the spend­ing they’d already approved resulted in the first-​​ever down­grade of the US credit rat­ing. The even­tual deal included the cre­ation of a “Super­com­mit­tee” charged with find­ing nearly two tril­lion dol­lars in addi­tional debt reduction.

The Super­com­mit­tee failed, due to Repub­li­cans refusal to con­sider even one dime in addi­tional taxes. (Thank you, Grover Norquist, the de facto czar of America’s tax pol­icy.) This means we have mas­sive auto­matic bud­get cuts set to kick in begin­ning in January.

Many of these bad deals are com­ing back to haunt us. The sequel approaches. (more…)

Aiming for the Foot

82
1 year ago
by dcpetterson in

I have earned a deserved rep­u­ta­tion for opin­ion­ated arti­cles. The fol­low­ing is an opin­ion piece. Be warned.

English: Crude drawing of the

No com­pro­mise

Once more, we’re approach­ing a dead­line. Once more, the Tea Party wing of the Repub­li­can Party is hold­ing Amer­ica hostage. We saw it three times last year, with bat­tles over the bud­get and the debt ceil­ing. We approached a gov­ern­ment shut­down and a default on the national debt. We are now approach­ing a tax increase for one hun­dred and sixty mil­lion Amer­i­cans. In all cases, these were not sur­prises. They were eas­ily fore­seen, and should have been avoided. These were not crises. They weren’t even bat­tles over the deficit or the debt limit or whether we should now have a tax increase.

Repub­li­cans are not stand­ing in the way because they oppose taxes or want to bal­ance the bud­get or think it’s a good idea to default.

It’s all about ide­ol­ogy and purely polit­i­cal maneu­ver­ing. (more…)

Go to Top