Tax cuts do not reduce federal revenues

[Anonymous]

It explodes the big government myth that tax cuts slash revenue. The reverse is also true. Hugher taxes do not necessarily equate to higher government revenue. Trudeau raising the top marginal rate did not produce anywhere near the revenue he and Morneau said it would.



By Walter E Williams



In describing the GOP tax cuts, House Minority Leader Nancy Pelosi said that they and bonuses American workers were getting were "crumbs." They were "tax cuts for the rich." Some argued the tax cuts would reduce revenues. Pelosi predicted, "This thing will explode the deficit." How about some tax facts?



The argument that tax cuts reduce federal revenues can be disposed of quite easily. According to the Congressional Budget Office, [size=150]revenues from federal income taxes were $76 billion higher in the first half of this year than they were in the first half of 2017. The Treasury Department says it expects that federal revenues will continue to exceed last year's for the rest of 2018.[/size] Despite record federal revenues, 2018 will see a massive deficit, perhaps topping $1 trillion.



[size=150]Our massive deficit is a result not of tax cuts but of profligate congressional spending that outruns rising tax revenues. Grossly false statements about tax cuts' reducing revenue should be put to rest in the wake of federal revenue increases seen with tax cuts during the Kennedy, Reagan and Trump administrations.[/size]



A very disturbing and mostly ignored issue is how absence of skin in the game negatively impacts the political arena. It turns out [size=150]45% of American households, nearly 78 million individuals, have no federal income tax obligation[/size]. That poses a serious political problem. Americans with no federal income tax obligation become natural constituencies for big-spending politicians. After all, if one doesn't pay federal income taxes, what does he care about big spending?



Also, if one doesn't pay federal taxes, why should he be happy about a tax cut? What's in it for him? In fact, those with no skin in the game might see tax cuts as a threat to their handout programs.



[size=150]Whenever tax cuts are called for, it's not long before they are called tax cuts for the rich.[/size] Let's look at who pays what in federal income taxes.



Using IRS data for 2015, the latest year available,[size=150] the Tax Foundation reports that the top 1% of earners made about 21% of the nation's income, but their share of federal income taxes was 39%. They paid more in income taxes than the bottom 90%, who paid 29.4% of federal income taxes.[/size]



In 2015, the top 50% of taxpayers paid 97.2% of all individual income taxes. Also, the top 1% had an income tax rate of 27%, while the bottom 50% had a tax rate of less than 4%. It turns out that 892,420 households — out of roughly 34 million total households —paid 39% of federal taxes that year. Most Americans have little or no federal income tax obligation, so how in the world is it possible to give a tax cut to them?



Another part of the Trump tax cuts was with corporate income -- lowering the rate from 35% to 21%. That, too, has been condemned by the left as a tax cut for the rich. But corporations do not pay taxes. Why? Corporations are legal fictions. Only people pay taxes. If a tax is levied on a corporation, it will have one or more of the following responses in order to remain in business. It will raise the price of its product, lower its dividends to shareholders and/or lay off workers.



Thus, only flesh-and-blood people pay taxes. We can think of corporations as tax collectors. Politicians love our ignorance about this. They suggest that corporations, not people, will be taxed. Here's how to see through this charade: Suppose a politician told you, as a homeowner, "I'm not going to tax you. I'm going to tax your land." I hope you wouldn't fall for that jive. Land doesn't pay taxes.



Getting back to skin in the game, sometimes I wonder whether one should be allowed in the game if he doesn't have any skin in it.

[Anonymous]

I don't know where I stand on taxation. As a traditional socialist, I don't see how charging some people more and more will benefit me. It's not like working people will see a dime of it.

[Bricktop]

As Winston Churchill said, taxing yourself to prosperity is like trying to lift yourself up in a bucket whilst standing in it.

[Anonymous]

As Winston Churchill said, taxing yourself to prosperity is like trying to lift yourself up in a bucket whilst standing in it.

I used to believe charging rich people more would help working people. I see now that has as much truth to it as taxing C02 to stop climate change.

[Bricktop]

What is often left out of the equation is that rich people don't hide their billions under a bed.



It is kept in banks, and used for lending to other people. The money is not actually stagnant, but used as investment in other businesses.



However, there is a fundamental flaw in capitalism when some can gain enormous wealth, whilst others have no income at all. That is an imbalance that needs to be addressed.

[Anonymous]

What is often left out of the equation is that rich people don't hide their billions under a bed.



It is kept in banks, and used for lending to other people. The money is not actually stagnant, but used as investment in other businesses.



However, there is a fundamental flaw in capitalism when some can gain enormous wealth, whilst others have no income at all. That is an imbalance that needs to be addressed.

That's why a social safety net is in place. But, I disagree if you mean that enormous wealth automatically implies it was gained through nefarious methods. Not everybody has the same ambition.

[Bricktop]

No, I do not imply any sinister or improper method of accumulating wealth. What I am saying is that if someone like, say, Bill Gates accumulates almost uncountable wealth then he has either charged too much for his goods and services, or paid his staff too little. It is an unbalanced distribution. Bear in mind that in Gates' company, he is not the only one raking in the millions. Many senior employees would be making much more money than can be justified. The equation of effort = reward breaks down at higher positions. What makes THEM wealthy is the effort of their subordinates.



Capitalism still has serious flaws. Communism is not the answer, but unbridled wealth accumulation by people like Gates, Zuckerberg, Jobs and others should be better controlled.

[Anonymous]

No, I do not imply any sinister or improper method of accumulating wealth. What I am saying is that if someone like, say, Bill Gates accumulates almost uncountable wealth then he has either charged too much for his goods and services, or paid his staff too little. It is an unbalanced distribution. Bear in mind that in Gates' company, he is not the only one raking in the millions. Many senior employees would be making much more money than can be justified. The equation of effort = reward breaks down at higher positions. What makes THEM wealthy is the effort of their subordinates.



Capitalism still has serious flaws. Communism is not the answer, but unbridled wealth accumulation by people like Gates, Zuckerberg, Jobs and others should be better controlled.

There is another reason for their vast wealth. They created something billions of people want. Or in Zuckerberg's case, they stole something many people want.



The digital age has produced a lot of billionaires.

[Bricktop]

Gates also "stole" something that people needed. He did not invent MS-DOS. It was previously called CPM (Computer Program Management) and Gates bought it for peanuts. Gates did not invent ANY computer operating system.



Not that he did not deserve his success, but he has been rewarded far too much for very little.



Zuckerberg is a thief who got lucky. However, a time will come when Facebook will have to face a growing reality...that public forums will comply with social responsibility legislation, and that will bring new players into the market. His monopoly will be temporary.

[Anonymous]

Gates also "stole" something that people needed. He did not invent MS-DOS. It was previously called CPM (Computer Program Management) and Gates bought it for peanuts. Gates did not invent ANY computer operating system.



Not that he did not deserve his success, but he has been rewarded far too much for very little.



Zuckerberg is a thief who got lucky. However, a time will come when Facebook will have to face a growing reality...that public forums will comply with social responsibility legislation, and that will bring new players into the market. His monopoly will be temporary.

I knew Bill Gates was not an innovator, but I couldn't recall exactly how Microsoft developed.

[JOE]

Both excessive tax cuts and excessive social spending costs the treasury money in any nation.



There has to be a balance.



For that reason I may consider voting for Conservative Andrew Scheer in the next Canadian election IF he promises to reduce spending & balance the budget.



I now feel bad that I didnt give Joe Clarke the vote in 1979 when he tried to balance the books.



He was only trying to do the right thing as the Recessions of the 1980s would prove in hindsight that he was correct.



I see ominous parallels with today and back then with government overspending in both the USA and Canada these days.



I voted for Trudeau last time but may not in 2019 because he's failed to turn off the tap and put the  brakes on spending.

[Anonymous]

Both excessive tax cuts costs the treasury money in any nation.

You did not read the Seoul brother's article agian. If you had, you'd know why what you posted is bullshit.



This is why he has you on ignore.

[JOE]

Both excessive tax cuts costs the treasury money in any nation.

You did not read the Seoul brother's article agian. If you had, you'd know why what you posted is bullshit.



This is why he has you on ignore.

Herman, theres no free lunch.



At the end if the day a tax cut or a social program costs money and there's a bill which has to be paid down the road.



And thats why I support fiscal conservativism.



Governments should only dole out tax cuts & social spending which it can afford and ONLY when the bills are paud and IF theres enough money in the kitty. Isnt that what Ralph Klein did?



Also Stephen Harper may have been an SOB but at at least at the end of the day he balanced the books.

[Anonymous]

Both excessive tax cuts costs the treasury money in any nation.

You did not read the Seoul brother's article again. If you had, you'd know why what you posted is bullshit.



This is why he has you on ignore.

The sixty year old virgin troll didn't read the op. Now there is a shocker :001_rolleyes:

[Anonymous]

Both excessive tax cuts costs the treasury money in any nation.

You did not read the Seoul brother's article agian. If you had, you'd know why what you posted is bullshit.



This is why he has you on ignore.

Herman, theres no free lunch.



At the end if the day a tax cut costs money and there's a bill which has to be paid down the road.

Read the article. Revenues are up with tax cuts because when they are combined with deregulation they produce growth which means more people working and more revenue. Justine said his tax increases would produce billions more in revenue and they did not.