Tax revenues exploded in the '80's after the Reagan cuts. The deficits were caused by spending increasing even faster. The biggest cause of our current deficit, besides excessive spending, is the recession and slow recovery. In any case there is no cause for worry. According to RM's economist, our deficit and debt levels as a percentage of GDP are well below european levels.
as an anti-tax cut guy, i'll be the first to admit that your post makes a whole lotta sense, and i agree with it. it seems the whole problem with tax cuts is that it's a kind of govt intervention that is totally unpredictable, both in its formulation (getting thru congress or not, or being modified acc to the whims of 662 additional political douchebags) and in its application (anything can happen as a result). on the one hand, as you said, cuts can stimulate business growth by putting money into the hands of investors and entrepreneurs, but it seems to me that in a stale pseudo-recession economic environment (like we had in the '80s), you also have the problem of "trickle-down" side-effects, which make the pre-existing problems worse than they were before the tax cuts. the saved tax income from reagan was NOT put into the right place in the '80s because everything was in the sh!tter anyway... your argument that poor families will throw saved tax money at a bigger TV, is a good point. but i'll play devil's advocate and make the following two points: 1)buying a bigger TV boosts retail profits, (but helps grow the trade deficit (unless maybe you buy a GE TV, but most of it's innards come from abroad)) 2)giving money to the wealthy doesn't always put that money back into investments and business growth. case in point: the goldman exec and prop trader who just bought a $20mil golf course in (gasp) jersey. [sidenote- if i had $20mil to throw around, i'd buy an island on ebay, as opposed to buying something in friggin' jersey ] another case in point from the '80s: those japanese execs (we all have pictures of them in our minds) giving each other $500 pieces of steak...before the recession wiped those bastards out...:eek:
you are not GIVING high wage earners anything except the carrot to go out and earn more. maybe you havent owned as business, but you dont just open the doors and the money floods in from Day ONE. its an investment of time, money and most of all your life energy - and your commitments and obligations dont end automatically if your business fails. its a risk and the economy is cyclical! and to deamnd that high wage earners have to pay more taxes via a higher tax rate is B.S. they are not a drag on the economy, ultimately they are the economy! (and dont talk about consumption being 67% of GDP, if the employers didnt create jobs, the dim-wits wandering around Circuit City would have any money to spend - and lets face it, most of them dont have cash anyway). the low-wage family doesnt even need a TV, they should go to night school! im just telling you, i live well below my means, while most live well beyond their means. i have no consumer debt, have properties with LTVs ranging from zero (as in free 'n clear) to 25%. and earlier in life i cleaned carpets, did landscaping, etc on nights and weekends to save on operating expenses and to get the tenants in as fast as possible. it didnt just happen and there were NO guarantees! look, i go into a fair number of apts and the people living on Section-8 rent subsidies are not sitting on milk crates in front of an AM radio. many have way more electronics gear than most people i know - and certainly more than i do. the SUVs in the parking lot look like the owners went thru Pep Boys with a friggin' magnet. i have never, ever owned a NEW car, and i am not scrooge - i just drive them into the ground with my business - so its not worth it! im at a point in my life where its not worth it to hire more folks, because when i add it all up, i make pennies on the dollar for expanding, unless i really go out a try to do it big-time.... im not gonna do that! i hire independent contractors on an "as needed" basis, including my part-time sec'y. so im telling you, if you want to encourage anything you have to provide a prize (my Carrot from earlier posting) and higher taxes isnt my idea of a payoff. my prediction is: unless they stop "blaming" the high wage earners and start catering to them rather than screwing them at every turn, you are gonna see more baby-boomers opting for early or semi-retirement status. then they can just sit back and watch the follies as more people think they are "entitled" to such things as open-ended medical care, food, housing, etc. im just telling you, the negatives can outweigh the positives on expanding, and the guys running businesses are the GUYS that should be targeted for tax relief. i mean, lets get real, do you think the newly leagalized hispanic immigrant (via a new-born nino) that has 6 kids and makes 8 bucks an hour desires a friggin tax break! he should get a free vasectomy, 'cause its cheaper to taxpayers than paying to feed, educate, blah, blah, blah his family... does he not place greater demands on the califronia infrastructure than i ? then why do i pay taxes and he gets a $300 (or $600 if he's married) friggin rebate check. and you know he's not paying a penny in income taxes! BTW, i spent the last year of college at a japanese university (at my friggin expense and it was not cheap!) and taught english to japanese executives for extra dough. although i dont remember the steak costing $500, i did have some live turtle's blood (mixed with fresh apple juice - i think) that was pretty pricey. i know the turtle was live, cause i watched 'em kill it and drain its blood in front of us! that enuf politics outta me!
Speculation that some of them will start paying dividends now that the government will not punish them for it.
Actually, by my math from 82 to 86 Tax Revenues dried up, hence the increase in 86. For instance in 81 Congress came up with ACRS to encourage business investment (sound familiar). Then in 86 this was replaced with MACRS which extends asset life and lowers the tax deduction. My point is that it is all smoke and mirrors and panic type planning. What caused the deficit is not the issue to me. The issue is how our government fails to adequately plan for it. Last year I made $87,000, this year, I didn't. But I budget for these things. And this is what I would like to see the government do. They wont, but they are not going to get any kudos for this type of half ass fiscal responsibility. There is no doubt we are in better shape than most if not all other countries. But that does not mean there is not room for improvement. For instance, there is a tariff on Canadian lumber. The estimated cost added to a new home using the lumber is 15%. So I buy a house that would cost 100k, it now costs 115K. I open my mailbox and get a check for $300. Gee Thanks Guys. We preach capitalism to the masses, but practice Socialism to the classes. Real Reform is all I ask.
Totally agree with you Q. That is the key; there is no way this ride is over until something is done to get businesses spending money.
QQQBall, You should be ashamed of yourself killing an innocent turtle. Turtles have rights too. Runningbear