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An important piece of tax data

I've blogged previously about the increased revenues that have filled the Treasury in the wake of Bush's tax cuts, but this weekend I ran across a bit of information that strikes me as significant. Economic growth played a part, but there's more to it than that. Check this out.

...more taxes were collected from each dollar of GDP than expected. When an economy of a given size produces higher-than-expected revenue after a tax change, it must mean that the tax code has become a more efficient revenue generator.

In other words, even if economic growth were zero, the government would still be taking in more tax revenue than before the tax cuts. Bush's critics can (and will) argue the extent to which the tax cuts contributed to economic growth, but the fact remains that the current tax structure is simpler better at raising revenue than the previous one. That's exactly why it's unwise to consider rolling back Bush's tax cuts. I hope Speaker-in-waiting Pelosi is paying attention.


That seems like a testament to the foundation of Supply-Side economics, Barry, to the fact that lower tax rates (down to about 22%) tend to increase tax revenues, just as tax rate increases tend to decrease revenues.

Only dopey Democrats seem to see that as somehow "counterintuitive."

The reality is that "people respond to incentives."

When tax rates go up, people (especially those with higher incomes) are more prone to defer more of their compensation in various tax deferred vehicles, resulting in LOWER revenues.

Likewise, when tax rates go down, those same people are given an incentive to take more of their money up front, resulting in HIGHER tax revenues.

Why do Liberals have such a hard time understanding such a basic concept?

I've already provided proof that the alleged "increased revenue" is just from the bursting corporate coffers and windfall profits to the ultra wealthy, who made their money at the expense of the middle class.

The middle class, most Americans, are worse off. No job security, low wages, no prospects, industries sent away and no new ones being created.

Quit your whining that G W Bush "stole your job."

There are some 6 million Americans employed in the IT sector today.

I dare say, it seems as though the good techs kept their jobs and those who couldn't compete...well, didn't.

Look in the mirror Barely...if you dare.

I have a good job, because I am one of the few. However, even I have no security. All American employees are now temporary contractors by previous standards.

The reason why people hate this "great" economy is because of the extreme instability of the labor market, since Americans must compete with people living in mud huts, and/or with their education and health car subsidized by their governments.

Either way, the party of "Conservatism" is out on it's ass come November. Too late to claim "but ... but ... they weren't the REAL conservatives!"

America has judged the conservatism you elected, promoted, and still defend. They found it lacking.

To paraphrase Richard Nixon, We're ALL globalists now.

Which Dems would rescind GATT & NAFTA?

Hardly ANY! Certainly not enough to ever get it done.

Hell, it was a Democratic Congress that PASSED NAFTA and expanded GATT...it was a Democratic President who signed NAFTA into law!

No, we're not going to go the way of France in America.

French students and workers rioted this past summer over new laws in that country that would reduce job security for slackers and thus enable French businesses to create more jobs with less risk.

DUMB French!

No one is going to fight this global economy and win.

The deck's stacked, the deal is done and besides, globalism HAS actually created more jobs in America than it's cost.

Just because you don't understand globalism, doesn't make it "evil."

The middle class understands that to compete with Mexican or Indian wages, we have to live like Mexicans and Indians, in squalor, without infrastructure, clean water, police protection -- civilization. Civilization takes a collective sacrifice known as taxes. There is not other way to build the roads, water, sewer, no other way to pay polic, firemen, teachers.

We have a huge trade deficit. We lose badly on trade. We don't need the world, the world needs us.

Why on earth should we lower our standard of living? Short term corporate profits?

The neocons hijacked conservatism, and now both are going down.

Globalization doesn't dictate that...and doesn't lead to that.

In the prevailing market-based global economy some jobs just aren't going to be viable in developped nations. THOSE jobs will increasingly be relegated to developing countries.

Over the last ten years American wages have gone up, as unemployment has gone down -THAT'S due, in large measure, to globalization.

Here's some of what you (and many other) fail to understand about Free Trade;

“The period from 1800 to 1913 witnessed rapid rates of growth in foreign trade which saw world trade grow at a far faster rate than global output.

"Foreign trade raced ahead at rates of 29 to 64 per cent for certain decades, translating into per capita growth rates of 23 and 53 per cent, even though global output is estimated to have grown at only 7.3 per cent a decade during this period. (It should be remarked that the growth in trade did not really 'take-off' until the 1850s).

“By 1913 the per capita volume of foreign trade was 25 times greater than its 1800 level while per capita output was only 2.5 times as great, meaning that in 1913 the ratio of foreign trade to global output was more that 11 times its 1800 rate.

"Estimates put the proportion of foreign trade to total output in 1913 at 33 per cent and about 3 per cent for 1800. This is a colossal increase by any measure.

“There is no doubt that the nineteenth century increase in international trade and the specialisation of labour and capital upon which it was based could not have taken place without large-scale capital flows. The very thing that is subject to so much harsh and ill-informed criticism today. Some idea of the scale of these capital flows can be gained from Britain's experience. Between 1870 and 1914 her capital exports averaged 4 per cent of GDP; they averaged 7 per cent from 1905 to 1913, reaching 9 per cent the following year. By 1914 her total foreign investments came to a staggering 20 billion pounds.

“During the whole of this period Britain had been the world's largest creditor nation. The size of the period's capital flows are particularly remarkable once we adjust them for purchasing power and relate them to the size of global income. What is also of interest is the direction of these capital flows. In the case of Britain over 50 per cent of her investments 1914 were concentrated in Europe, the US and the dominions, with the US enjoying about 22 per cent of the total.”

“History therefore demonstrates that there is nothing new about so-called globalisation, including the arguments against it, which takes us to an old anti-free trade argument that has no substance at all. It can never be sufficiently stressed that free trade does not raise the volume of unemployment (unions labour laws do that). What it does do is reallocate labor and capital to more efficient lines of production.”

“It is this increased efficiency that raises welfare by providing cheaper goods and services thus increasing purchasing power. Protectionists, in all their guises, argue that by opening up our markets real wages, especially of the unskilled, will be driven down by 'cheap' foreign labour and capital outflows to 'cheap' labour countries. The first argument is based on the assumption that by importing cheap goods we are, in a sense, actually importing 'cheap' labour which therefore indirectly competes against unskilled domestic labour hence driving down its price.”

Gerard Jackson

Your argument agianst Free Trade is specatcularly weak. You point to good things, pretend they are bad and say, "Look what globalization has wrought," and you point to bad things Free Trade did not create and inanely blame those things on Free Trade.

Here's a great admonition from an Indian economist;

"If you are among free-trade sceptics, consider the following parable.

“During the 1970s, a trade economist was invited to visit China. As he toured the country, he noticed that construction workers invariably used shovels.

"He could not resist suggesting to his host that importing a few bulldozers and replacing shovels by them could drastically cut costs.

"The host was horrified and reminded him that such a change would lead to huge unemployment."

"In that case, rejoined the trade economist, you may as well replace the shovels with spoons!”

Arvind Panagariya
Economic Times November 22 2000.

"We have a huge trade deficit. We lose badly on trade. We don't need the world, the world needs us." (BH)

Actually we WIN on trade!

Cheaper goods and services is a net gain for our economy and a net loss for those producers who subsidize their products with government underwriting or financing, as we not only get the cheap goods, but the free use of all that currency of theirs they use to support those products.

It's when you have a huge trade surplus that your economy is poor, because trade surpluses are created by that country's goods and services being cheaper than its trading partners. That's always due to much cheaper labor and a lower standard of living for the trade surplus country.

Our relatively high standard of living is one of the main reasons for our trade deficit.

We don't have a high trade deficit with the likes of France & Germany, it's largely with countries like India and China.

You're such an idiot. I made no argument against modernization. My argument was against American workers competing directly against third world dirt-eaters. Once again, your endless Straw Man stupidity is on display.

When you undermine educated Americans, you undermine education. When you undermine skilled workers, you undermine entire trades. You lose knowledge. You give no incentive for the sacrifices higher education entails.

You are short-sighted and stupid.

Globalism is responsible for NOTHING good in our economy. Technology and modernization is responsible for everything good, and corporations now want to take the profits of *everyone's* work for the few at the top, destroying the middle class and our country to amass their personal fortunes.

There is nothing good about losing skilled labor and jobs requiring higher education to other countries.

You are a boob.

Two weeks.

Don't get frustrated just because you don't follow what you read.

Just read it over a few times.

The above quotes proved that globalization doesn't "pit American workers against lower-paid foreign workers."

That DOES NOT happen.

We've rightfully exported much our manufacturing base overseas because those jobs are no longer economically viable here.

They've been replaced by newer, mostly better paying jobs.

ALL modernization reduces employment by requiring fewer workers to accomplish more tasks...THAT, by the way, is also very good...at least immediately for investors and ultimately for those workers as well, as new jobs inevitably replace the old ones lost, though sometimes there's a lag.

As Gerard Jackson correctly pointed out, "“History therefore demonstrates that there is nothing new about so-called globalisation, including the arguments against it, which takes us to an old anti-free trade argument that has no substance at all. It can never be sufficiently stressed that free trade does not raise the volume of unemployment (unions labour laws do that). What it does do is reallocate labor and capital to more efficient lines of production.”

True that.
"There is nothing good about losing skilled labor and jobs requiring higher education to other countries." (BH)

Not true. If, for instance, foreign programmers can do the same work for less money, it benefits not only American companies, but American CONSUMERS to use that cheaper labor.

At any rate, you can blame Bill Clinton and his Democrat controlled Congress for passing NAFTA in January of 1994 and the Democratic Congress which expanded GATT in 1991.

Now, I wanna hera you bash those "evil Democrats."

Come on....I can't hear you....

Democrats aren't in power, Repugs have absolute power, so I think I'll keep bashing Repugs.

Repugs could overturn NAFTA and GATT right now. They have had years to do it.

No matter what you say, Americans know when they have lost income, opportunity, and their future to the Greedy Old Perverts party.

Under Reagan, almost everyone was better off, under Bush, almost everyone is worse off.

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