Comments on: One Step Forward, Two Steps Back

By: Terje

Terje — Thu, 22 Mar 2007 11:34:53 +0000

Trinifar – the following data suggests that revenue declined in only two recent years (2002 & 2003) and then rebounded strongly.

http://www.irs.gov/pub/irs-soi/histab18.xls

If you adjusted for inflation then maybe it would be fair to say that revenues declined in three years (as your quote indicated). However none of this takes away from my point. Tax revenues now are much stronger than they were in any earlier year. Tax rate cuts have not caused any sustained decline in revenue.

By: Club Troppo » Missing Link

Club Troppo » Missing Link — Thu, 22 Mar 2007 02:24:52 +0000

[...] ChrisV at the Australian Libertarian Society blog discusses a recent Cato Institute piece that compares the Bush presidency unfavourably with the Clinton presidency. His verdict? It is hard to avoid the conclusion that the Bush presidency has been an unmitigated disaster for libertarianism in America. Whatever one’s views on Iraq, it certainly didn’t represent a philosophy of decreasing the level of state power. About the only positive thing on the Bush Jr. record, from a libertarian point of view, is the tax cuts. Unfortunately the cuts were fuelled by enormous budget deficits and a looming fiscal crisis thanks to Social Security. [...]

By: rowan

rowan — Wed, 21 Mar 2007 22:41:54 +0000

chrisjv,

is there any emperical evidence either way? I also think i distinction needs to be drawn between a government in a bad economic position and a country in a bad economic position.

Perhaps a government would eb less likely to cut services as much as just trimming down and making a few efficiency improvements.

Although i’m not sure i fully agree, you do have a point about the unpopularity of cutting services. that said, both tax increases and service cuts can be redily disguised in a major restructure.

By: chrisjv

chrisjv — Wed, 21 Mar 2007 15:47:07 +0000

There isn’t any empirical evidence that a bad economic position makes a country less inclined to accept socialist policies. The opposite, if anything. While it’s true that increasing taxes is unpopular, it must be less unpopular than cutting services, otherwise we wouldn’t have the problem of big government in the first place. Governments usually combat the unpopularity of tax by levying it on minorities – corporations and the wealthy.

By: rowan

rowan — Wed, 21 Mar 2007 04:04:46 +0000

chrisjv,

i would disagree. if a large government is in, what could be seen as a sustainable position of having enough tax revenue to cover its costs then it will be in a much better position to stay large or get even larger, whereas if it is based on borrowing then the government will be faced with either increasing taxes which isn’t very popular politically, or decreasing the size of government.

By: terje (say tay-a)

terje (say tay-a) — Mon, 19 Mar 2007 21:09:55 +0000

I’d prefer to have an indebted government rather than a high taxing government. That way it is the bankers problem rather than our problem. And even if it means higher taxes later on I’d rather be exploited next week rather than this week.

Trinifar – your article contradicts other pieces I have read from the CBO. But I’ll seek to get the details before I comment further.

By: chrisjv

chrisjv — Mon, 19 Mar 2007 16:29:02 +0000

Even that is debatable, I suppose. I should refrain from general pronouncements completely and just say that without addressing the fundamental government spending problems, the Bush tax cuts look a lot to me like rearranging deckchairs on the Titanic.

By: chrisjv

chrisjv — Mon, 19 Mar 2007 16:26:26 +0000

Terje, fair point. I should have said that tax cuts are worse than useless if you don’t cut government spending to match. Big government built on big tax is better than big government built on borrowing money.

By: Trinifar

Trinifar — Mon, 19 Mar 2007 07:06:30 +0000

From Mark McMullen, a senior economist at Moody's Economy.com as reported in the Christian Science Monitor:

When Bush took office in 2001, the CBO was forecasting a decade of budget surpluses totaling more than $5 trillion. Then came a recession, the terrorist attacks of 9/11, and enormous wartime spending. The Bush tax cuts helped to stimulate the economy, but at the cost of lower tax revenue. "We had three years where revenues went down," says Mr. Horney. "All that has happened is that we have ... caught up from the really bad decline that we had."

By: nicholas gray

nicholas gray — Mon, 19 Mar 2007 05:51:47 +0000

Reminds me of Mrs. Thatcher. She campaigned on lowering taxes and reducing the state, but all her good intentions seem to have been for nought. Even if we credit Mr Bush with the best of intentions, the growth of the government seems inexorable. Maybe there is a natural law, that governments can only grow, not shrink.