Tax receipts question

[trotsky]

OK, so the official White House spokesnetwork (FAUX) announced with glee today how tax revenues increased this year, which they then slobbered all over to show how "Bush and the Republicans" were right all along, supply side works, you cut taxes and revenue grows, yada yada.

Now IIRC, the same thing happened around 1984 after the Reagan tax cuts of '81, BUT it was because that was when Reagan actually DID raise taxes - Social Security and all that. Gee, what a strange concept - you raise taxes, and revenues increase!

So what's the "gotcha" this time? Did some of Dimson's tax cuts expire, thus increasing gov't revenues? Corporations delaying tax payments until now? Who knows the REAL story?

[RobertSeattle]

1. I don't believe any of Bush/GOP tax cuts have expired yet

The don't expire for a few more years - but they calculate the revenue created by their expiration in there deficit projections, even though the publicly say they don't want them to expire - thus causing me to bang my head on my keyboard.

[thoughtanarchist]

2. discounted tax on repatriated profits.

There was a tax "holiday" (really a tax discount) on corporate profits earned overseas last year. All that profit brought back into the states increased tax revenues by virtue of it's sheer volume. A one trick pony, that.

[trotsky]

3. That's the kind of thing I was expecting to hear.

Naturally, we can all wait with baited breath to hear FAUX report next year that revenues are flat, or down, and at that time cast doubt on supply-side magic, right? ;-)

[Warpy]

4. They've raised them on kids saving for college, tripled them

and I'm pretty sure there are other sneaky and destructive tax increases in there somewhere.

Don't kid yourselves, no matter how delusional wingnuts burble about supply side economics, it's a BUST. The only ways to raise revenues are to raise taxes or raise the wages that provide them. That's it.

Anything else is right wing bull shit.

[trotsky]

5. Oh yeah, you don't have to convince me that supply side is bogus.

That's why I knew there was another factor responsible for revenues going up. Good luck getting the truth from the so-called "liberal" media is all!

[ticktockman]

6. Tax receipts are only recovering their losses since 2000

OK, so the official White House spokesnetwork (FAUX) announced with glee today how tax revenues increased this year, which they then slobbered all over to show how "Bush and the Republicans" were right all along, supply side works, you cut taxes and revenue grows, yada yada.

Now IIRC, the same thing happened around 1984 after the Reagan tax cuts of '81, BUT it was because that was when Reagan actually DID raise taxes - Social Security and all that. Gee, what a strange concept - you raise taxes, and revenues increase!

So what's the "gotcha" this time? Did some of Dimson's tax cuts expire, thus increasing gov't revenues? Corporations delaying tax payments until now? Who knows the REAL story?

The big "gotcha" is that revenues have just partially recovered from the very deep hole they fell into after 2000. The following graph shows receipts as a percentage of GDP:



The actual numbers and sources are at http://home.att.net/~rdavis2/recsrc.html. As can be seen, individual income tax revenues dropped from 10.34% of GDP in 2000 to 7.01% of GDP in 2004. In 2005, they just partially recovered to 7.54% of GDP. Corporate income tax revenues dropped from 2.13% of GDP in 2000 to 1.22% of GDP in 2003. They have totally recovered, reaching 2.26% of GDP in 2005. Part of this is likely due to the tax "holiday" on overseas corporate profits mentioned in reply 2 by thoughtanarchist.

Hence, if you want to "prove" that some policy increases revenues, all you have to do wait for a recession and then start implementing that policy, over and over again if necessary, until the inevitable recovery occurs. It doesn't matter whether that policy is to cut taxes three times as Bush did or simply to do a "revenue dance" each year. Eventually, the recovery will occur and, like a rooster taking credit for the dawn, you can trumpet the vindication of your policies.