Forum Post: Income Tax Cut, JFK Hopes To Spur Economy 1962/8/13
Posted 12 years ago on Nov. 22, 2011, 1:23 p.m. EST by darrenlobo
(204)
This content is user submitted and not an official statement
No, not a Republican just Kennedy talking about the benefits of lower taxes. Too bad he didn't say no taxes. http://youtu.be/aEdXrfIMdiU
Everybody should have lower taxes. We can do that if we're willing to cut our military and overseas empire and stop the wars. Don't let fascists trick you into supporting "higher taxes for the rich" in order to continue getting their corporations funded by government money and bailouts. ...and if you really believe taxing the "rich" will work, you're out of your mind, they will evade, lay people off , off shore, move out of the country, whatever it takes, the middle class and poor will be the ones who pay the real cost.
so to recap, we need to cut spending , especially in big bloated corrupt areas of government, then we can lower taxes for everybody and that will help spur the economy
Polticians can't hand out money to private banks and corporations if we don't send it to washington in the first place, CUT spending, take their power away.
Remember that Kennedy reduced the top tax rate from 90% to 70% and Reagan further reduced it from 70% to 50%. There is a law of diminishing returns. When rates were are that high, you can reduce tax rates and stimulate economic activity to the point where revenue increases due to the increased economic activity. As with anything, after a certain point, however, you get less and less effect for the changes you make. Eventually, you get the reverse effect where cutting taxes cuts revenue. (If the law of diminishing returns were not the case, you could just, as you say, cut taxes to zero and have more tax revenue than ever. That, of course, clearly would not work. At some point along the scale of cuts, you start to see a loss in revenue because the increase in economic stimulus is no longer enough to offset the cuts. That is where we are now. Any reducing of taxes only makes the budget deficit worse.
The fact is now that the rich pay less than an equitable share of the total taxes. If you don't believe me, you can read the following article that goes into it in more detail: (It's the other half of the truth that you're not hearing int he Republican argument.)
http://thegreatrecession.info/blog/2011/11/bushwhacked-by-the-bush-tax-cuts-for-the-rich
--Knave Dave http://TheGreatRecession.info/blog
well said
I'm curious why you think the govt shouldn't get less revenue. The best thing for everyone would be less spending.
Because, ever since the Bush Tax Cuts, we had enormous deficits that are a big part of why we're broke. In the Clinton years, we reversed decades of massive deficits with modest tax increases. It worked, and the government was finally paying down its debt. George Bush immediately turned all of that on its head, and we went right back from being a surplus nation to a debtor nation again. We need to undo the cuts that have increased out debt to a level where we don't have enough credit-worthiness left to manage our way out of to this crisis. We need to pay as we go.
Obviously, we also need to cut expenses considerably, as you say, in order to live within our means. However, I see Democrats currently willing to cut expenses and make some concessions (and not just military) but Republicans are TOTALLY inflexible. Even though anyone can look at a chart and see our country went right back on the bankruptcy trail as soon as the Bush Tax Cuts became effective, they refuse to undo them. Even though anyone can look at the economy under the Clinton tax increases and see that it boomed just as much as it did under Reagan, they refuse to go back to that combination of taxes and thriftier government that was such a winning scenario then.
As soon as the Bush Tax Cuts were approved, I said, "There goes the country and the economy right back into the same hole we finally had found our way out of." It was a travesty.
There is a right balance between taxes and spending cuts that works, and we have only to look back to when we had Clinton for president and Gingriche ruling over a money-tight House to see when we found the right combination between Democrat and Republican ideals.
Tax payers need to pay their way as they go (no matter how much it hurts) and not put that pain on future generations. We are NOW the future generation to which others assigned the pain. There is a level of taxes that maximizes revenue. Going either above or below that mark reduces revenue. We have soooooo much debt to pay down that we must maximize revenue for years to come, even if we cut expenses drastically if we are ever actually going to turn this debt back down to the high levels it was at when Reagan first took office by campaigning against the high national debt. We have many years of profligacy to undo. The time to pay the piper has come.
--Knave Dave http://TheGreatRecession.info/blog
What about the Taxpayer Relief Act of 1997? http://en.wikipedia.org/wiki/Taxpayer_Relief_Act_of_1997 This is part of what really got the '90s boom going by stimulating more growth.
I have to disagree that there is a need to tax & spend above certain levels. Lower or no taxes mean more wealth & liberty. It's not only taxes that impact the economy. When the Fed engineers a boom it sows the seeds for the future bust. That's been the story all along. Tax cuts or tax increases can aggravate or mitigate the boom & bust cycle but they don't cause it.
I alluded to the Taxpayer Relief Act above. That was the big Reagan tax cut, and I acknowledged that it created a boom to the economy ... or was PART of what created that boom. Equally, true, however, is the fact that those tax cuts remained in place when George Bush I took over as things slipped into recession. Also equally true is the fact that Clinton raised taxes even more than George Bush I did toward the end of Bush's tenure, and the economy boomed again and boomed as big as it did under Reagan. We also had the worst deficits we'd ever seen up to that time under Reagan. His tax cuts did not increase revenue enough to balance the budget where he increases spending in other areas.
That means we have to parse things a little more carefully to figure out what happened:
1) Tax cuts will always stimulate the economy, but it is not and never was true that tax cuts on the supply side (capital gains cuts and other cuts that benefit the rich, so-called "suppliers") do any more to stimulate the economy than if all those cuts go to the poor. I'd argue that, had Reagan given ALL the tax cuts to the middle class, neither the poor nor the wealthy, it would have done far more to stimulate the economy. The middle class and the poor buy things when they have more money. And they can do it without incurring more debt. The rich will always step in to build factories and make things if there is a market, whether they get tax cuts or not. No market ever goes untapped once it is know. So, putting more money back into the middle class certainly increases spending and builds markets for the rich to exploit. The money will always bubble up; so it has a much larger multiplier going that way than it does when it goes to the rich who may...
a) spend it all on factories overseas that don't help employment here at all, but actually harm it;
b) spend it all on speculating in the stock market to get even more of those tax-cheap capital gains, which does little to create actual employment and does little for the middle class;
c) spend it all on football teams and foreign travel, which does nothing for the average American.
Give the tax breaks to the middle class, and the will always move upward through the economy into the hands of the rich, but it will pass through several hands in getting there.
2) the banking deregulation of Reagans time also had a great deal to do with accelerating the economy. It created lots of cheap and easy credit and led almost immediately into the Savings and Loan Collapse of the Bush I era. Years of additional deregulation led to the present collapse. The fact is that cheap and easy credit also accelerates things, BUT it does so recklessly. Banking deregulation is like taking the governor off an engine to get it to run faster. Yes, you can make the economic engine run faster that way, but it is at the cost of greater and greater risk to your banks if the economy ever turns downward. Eventually, the banks became so overleveraged that they were hugely top-heavy and easily tumbled when the housing market reversed so that values were declining. That deregulation only worked so long as housing values went up forever because the increase in value of the home was just about the only collateral the bank had on all those loans if something went bad. It's just that they and the government assumed such an increase was guaranteed when, in fact, nothing is ever guaranteed.
3) It's amazing how much fun you can have when no one is paying for the ride. One of the biggest boons to the economy in the Reagan years was not the tax cuts but the enormous government deficit spending. The government does not spend without creating jobs, whether they are government jobs or contract work for the government by private enterprise or jobs created by all the materials the government buys. And, when no taxpayer is having to pay for any of that because we are sending it all to the next generation to pay for as debt, it's amazing how much fun we can have on the G.I. credit card!
So, there are many factors involved that created the Reagan boom. Some of which we are now paying for (and which I wrote clear back then would come to haunt us in about twenty years. It took a little longer than I thought, but it is not hard to see where the debt-driven economy had its birth as an idea.)
For more on all that, read: http://thegreatrecession.info/blog/2009/01/downtime-collapse-of-the-colossus
--Knave Dave http://TheGreatRecession.info/blog