How can the Government the cut taxes and expand the Government?

Oh, you read Creature at Jekyll Island.

So you know what the NAP is, right?

Do you accept or reject it?

Reaganomics is just sloganeering. There are no "Reaganomics". You're talking about Military Keynesianism.

Again, I will ask you. If lower taxes generates more revenue, the the ideal marginal tax rate must be 1% or lower (as close to zero as possible). Is this true or false. And why?

 

It's probably been about 6 years since I read it, so can you refresh me on NAP?

Yes there is.

False. I'm not trying to claim the lower the taxes the more you generate. That's just stupid. Obviously if you did the graph, as you lower the tax rate it would converge to zero. There's a point where taxes are to high and sort of "handcuff" people in the economy.

If you view it as a graph between government tax revenue and economic growth, obviously the extremes (0% tax, 100% tax) will yield $0 revenue. Since taxes are too high as they are, we're on the side of the economy being hand cuffed by politicians, so if you cut taxes, the economy will boom and you get more revenue.

Common sense. I don't think I can explain it more fully than that.

 

I'm not sure I see a distinction between "real" debt and money printed out of nothing. Whether it is printed as actual greenbacks or bonds and treasuries doesn't matter much.

Sure it does. Inflation went down under Reagan mostly because the government changed the way it reports inflation. There was also a flight of capital to the U.S. because Russia looked like the only alternative. The global market is different these days with China and India and even some competitive states in the EU looking like better investments.

Then Reagan wasn't doing Reaganomics either! lol

The long run effect is growing government consumption to pay off the unfunded government consumption of the past. Now we spend about 10% of our entire GDP paying off those debts, just to make minimum payments.

China isn't burdened by these types of obligatory payments so they can afford to have development zones with ~12-14% corporate tax rates compared to our own ~33% rate.


Here's the main thing I'm looking at. Interest on the debt and social security/medicare/medicaid (types of debt) are growing as a percentage of GDP. All future policy and tax rates will have to include at least 20-25% of GDP just to maintain existing obligations. Failure to meet these obligations would basically mean starving old people and $20 loafs of bread.





(and that was projected when we thought the "surplus" was going to last)
http://www.cbo.gov/doc.cfm?index=3521&type=0

 

Okay. Let me explain.

Real debt signifies that no change in the money supply. The net effect is zero. Debt is when someone gets more and another gets less.

Let's say I had $10. You want to borrow it. I give you the 10 dollars.

I don't have my $10 anymore. You have $10 now.

Net effect: 0.

-----------------

I don't think I can continue with the rest of the stuff if you can't recognize the difference between "real" debt and the inflationary debt caused by the monetary system.

-----------------

Maybe someday you'll be able to realize that reaganomics can be applied in a surplus lol.

 

Uhhh, the government just doesn't borrow like that

I guess they could, but they really usually don't. Like, 10-15% of the public debt has been financed that way.

TBH I have no idea what Reaganomics is other than a counter-intuitive glorification of government consumption by those claiming to despise government consumption.

 

What do you think government bonds are for?

Good. So at least you can concede the point. The fact is that your only complaint about reaganomics and why it doesn't work is because the government "might" print off money to pay for it. Of course the net effect is zero. Since inflation is the tax that eats up the tax break.

But my point is that reaganomics works. If you're just printing off money to make up a tax cut, than you're not doing Reaganomics.

You can make up any scenario you want to disprove it, but it works. You can apply it during a surplus and your scenario is instantly debunked.

I'm not in favor of Reaganomics. It works though. I don't like the idea of the government having more money.

 

The NAP is the foundation of libertarianism. It's got little to do with Jekyll Island. It's the Non-Aggression Principle.

Uhm, no. As I explained, it is Military Keynesianism. It's been done many, many times through history, it's just that the modern day boob has no sense of history OR economics, so slogans like REAGANOMICS! BUSH TAX CUTS! IT'S THE ECONOMY STUPID etc are what dominates the discussion.

Actually, that is exactly what you are trying to claim with supply side economics. That lowering taxes boosts revenues. I say this is at best theory, as we know that it has never been proven in the American economy without subsidizing the loss in tax revenue with debt.

So where does the side where cutting taxes end? What is the level between 0 and 100%, considering we're already taxed too much (per you)?

Again, if the theory is that cutting taxes raises revenues, then we should cut them down to a fraction of a %. Otherwise the theory of cutting taxes to increase revenue is false.

It's based on unsupported statements of fact, lack of empirical data and you oh so conveniently choose to completely ignore government deficit spending and it's effect on tax revenue, AND ignore inflation in the money supply.

It's like putting two pieces of bread together and calling it a common sense sandwich. There's no "meat".

 

As Korr said, that is not how the government funds itself with debt. He and I are both pretty well versed in this sort of topic.

I don't think you can continue with this because it is a strawman. The government does not fund itself with "real debt" as you like to call it. All or nearly all government debt under a central bank is inflationary.

That's why you have a central bank! It's the lender of last resort. Which means the government can (and does) print the money to create the debt!

Maybe someday you will have an example to show us. Because what you call Reaganomics can only be done with debt spending.

 

Government pays interest on notes and bonds while the bills are issued at a discount.

No one would lend money to the government just to get the same amount back . . .

 

When you borrow money to pay the interest, you have a problem.

 

Because when the government reduces taxes, it actually increases its income.

There is no reduction in income. Under the Bush tax cuts revenue has actually increased. Higher taxes means less money, not more.

Your example is incorrect. However I think we should be reducing spending at the same time we increase our income. Then we can let tax payers hang onto even more of their own money. Doing that means even more of an increase in income.

If you need an explanation on why this works this way, let me know and I will illustrate. Keep in mind that no government has ever increased its revenue base by raising taxes.

 

My friend, I am almost 100% sure this is a supply sider fallacy and it's not based on fact.

Under the Bush tax cuts, deficit spending has also increased, creating more economic activity, more corporate profits and personal income tax. Then you add in the monetary inflation during the Bush era, which lead to inflated house and stock prices, and it's not hard to see that inflation has caused the nominal gains in revenue, but if you were to use a realistic monetary deflator, I bet that it's less in REAL income.

This, is reasonable. But bear in mind, if the aggregate is constant, you can't take more from one, and say you are taking less. It's a zero sum game. That's why "Reaganomics" or supply-side economics is a falsehood.

Again, if lower taxes raises more revenue, then the ideal tax rate is 0.000001%. It should generate more than a 5%, 10% or 20% tax. Right?

 

Do you really want me to post the numbers again?

And unfortunately there's been a lot of expense in Bush's two terms, all of which was the result of failed policies of the past administration.

A falsehood that is a reality... There's a conundrum.

The ideal tax rate on income is ZERO, yes... Income.

 

I'm stepping in here to throw my lot in with the 0% income taxers. Every single penny you earn is yours and yours only.

In fact, I'm pretty sure I'm one of very few who think the Federal government should not be collecting taxes from the masses. A flat tax levied by the fed upon the states should be enough to support any constitutional government programs.

 

I'm lost..can you explain how my example was wrong in different words. I have read what you stated and am more confused.

 

I'm not trying to be difficult, but I don't recall you posting the #s before. You can just link me to them if that is easier.

Right, but deficit spending increases the monetary supply and creates more economic activity to tax.

I think you're implying correlation as causation. Like, Bush has kept us safe since 9/11.

Look, let's imagine that my tax cut saves me $500. Now if I spend that $500, how much more tax can the federal government squeeze out of it, than the $500 they didn't tax me on in the first place.

I think inadvertently you have made a very bad argument, that the government can "create wealth" by taxing less. Not just return the fruits of labor to the people, but actually create a multiplier effect on wealth generation by lowering taxes.

It's simply not rational or mathematically possible.

Yeah, but taxing business profit doesn't work either. It gets priced into the sale of goods, and passed on to the consumer. So while I may not be paying the tax off my income, I am paying it every time I pay for something.

Again pricing is cost plus.

The way that the Bush tax cuts inspired more "base revenue" was through inflation of the monetary supply (increasing nominal receipts) and easy credit, spurring an artificial consumption boom in housing, consumer goods, lattes.

It's strictly sleight of hand. Reagan did it in the 80s by throwing tons of money at the military, creating defense jobs and feeding corporations, that produced goods that had no immediate social value, and no market demand.

Again, a sleight of hand trick.

 

There are a lot of us, and it is growing. If you really want to piss yourself off and take the red pill, watch Aaron Russo's "America: Freedom to Fascism" on Google Video. It will make you livid about the tax situation.

 

Yes.

No, what we need is a USE tax. You only pay tax when you spend money. You don't make money taking it from those that create wealth. You earn money when you let people keep their own money and then let those people spend it. After all, I think I know better how to distribute my wealth than the US government does.

 

No. You shouldn't be taxed when you buy food. Or education. Or medicine. Or shelter. Or spiritual goods. Or technology. Or transportation. Or energy.

I wholeheartedly disagree with the idea of taxing people for "living". That's a bad outcome, barely an improvement, if it can even be called such, over taxing the fruits of our labor.

It further cements the notion that we live only by the allowance of the government. That every time we eat, or heat our homes, or shoe our feet, the government is entitled to charge us for that.

It's almost as immoral as stealing by threat of violence (income tax).

IMO, Frank Chodorov, a great conservative icon, put it best.

Taxation is Robbery

Switching to a flat sales tax is just tinkering around the edges. Dressing up the same old song and dance differently. The issue is a too big government and too much spending, waste and fraud. Not that we don't pay enough, or pay the right way.

We need to get rid of the income tax and replace it with NOTHING. With less revenue, our politicians will truly be forced to stop wasting, and start becoming efficient with whatever other taxes, duties and tariffs they collect.

 

It's called the (M.M.J.S.) Mia Mumbo Jumbo Syndrome and I think you got nailed with it. Sorry about your luck. It's happened to the best of us.