Where'd All That Money Come From?
Tax cuts mean less revenue for the government, right? Not necessarily. While the debate continues on the level of causality, evidence continues to mount that there is at least a correlation between tax cuts and revenue growth. The truly interesting part of this New York Times story that appeared in today's Strib is the source of the additional revenue.
"The big surprise this year has been tax revenues, which are running nearly 15 percent higher than in 2004. Corporate tax revenues have soared about 40 percent, after languishing for four years, and individual tax revenues have climbed as well."
Those darned evil corporations. All take and no give. Yes, they were more profitable, but isn't that the point. Fiscal policy that makes business (large and small) more profitable so that society can reap the benefits of economic growth (more jobs, better wages, increased productivity that leads to lower costs for the same goods, etc.).
"Most of the increase in individual tax receipts appears to have come from higher stock market profits and business income of relatively wealthy taxpayers. The biggest jump came not from taxes withheld from wages and salaries but from quarterly payments on investment profits and business earnings, which were up 20 percent this year."
Those on the left keep chanting the mantra that the top 1% or 2% in income need to pay more taxes. Well, how's 20% more? I would be willing to bet that even a John Kerry or Larry Pogemiller type tax rate increase would raise that kind of revenue. In fact, I would argue that it would likely result in a decline in tax revenue.
Yet the author still doesn't get it. The story concludes...
"Other financial hurdles are just down the road. Bush's intent to extend his tax cuts indefinitely, and to add new ones, is expected to drain more than $1.4 trillion from government coffers over the next 10 years."
Well, if those drains are similar to the drains caused by this round of tax cuts, drain away. For a more thorough analysis check out SCSU Scholars or Viking Pundit.
"The big surprise this year has been tax revenues, which are running nearly 15 percent higher than in 2004. Corporate tax revenues have soared about 40 percent, after languishing for four years, and individual tax revenues have climbed as well."
Those darned evil corporations. All take and no give. Yes, they were more profitable, but isn't that the point. Fiscal policy that makes business (large and small) more profitable so that society can reap the benefits of economic growth (more jobs, better wages, increased productivity that leads to lower costs for the same goods, etc.).
"Most of the increase in individual tax receipts appears to have come from higher stock market profits and business income of relatively wealthy taxpayers. The biggest jump came not from taxes withheld from wages and salaries but from quarterly payments on investment profits and business earnings, which were up 20 percent this year."
Those on the left keep chanting the mantra that the top 1% or 2% in income need to pay more taxes. Well, how's 20% more? I would be willing to bet that even a John Kerry or Larry Pogemiller type tax rate increase would raise that kind of revenue. In fact, I would argue that it would likely result in a decline in tax revenue.
Yet the author still doesn't get it. The story concludes...
"Other financial hurdles are just down the road. Bush's intent to extend his tax cuts indefinitely, and to add new ones, is expected to drain more than $1.4 trillion from government coffers over the next 10 years."
Well, if those drains are similar to the drains caused by this round of tax cuts, drain away. For a more thorough analysis check out SCSU Scholars or Viking Pundit.
posted by Nordeaster | 11:52 AM
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