The Tax cut... why should it work now - Page 2

Almighty Colin · 06-09-2003

Quote:

Originally posted by wig@Jun 9 2003, 11:15 AM
You simply cannot create greater prosperity (expansion) through paper money and deficit spending without being subject to the same degree of amplitude on the contraction.

Maybe the jury is still out.

Is that the goal?

Can't deficit spending be (and isn't it) used during slower than average economies to lessen the effect of recessions at the cost of reducing the strength of the booms?

I'd rather live in a country that always grew at 3% EVERY year rather than a range of between -7% and 13% (for example) that averaged 3%. The booms are nice but the busts are too painful for too many people. Large magnitude busts leave too many people without work.

Vick · 06-09-2003

ok now that Wig and Colin (as well as many other fine minds) are here please give me a little help (maybe you can figure out the formula if there is one)

Is the current tax cut (actually a rebate as checks are going to be sent out) going to stimulate the economy enough to offset the reduction in the actual tax base ($ the gov have to spend) ?
Will the tax cut add more revenues to the tax base due to growth the rebate will provide?

I'm under stand supply side and trickle down (and am a fan of both)

But I'm also a firm believer in tax cuts/rebates should be equal to reductions in spending - then we don't have the situation we had in the late 70's- early 80's where the USA ran at a huge deficit (which caused the USA to use up available funds which gave us some inflation and higher interest rates - to some degree)

Almighty Colin · 06-09-2003

Vick,

The government is spending more money AND cutting taxes so there's not truly an offset. Now, THAT'S stimulus. ;-)

No one knows the answer to that question though. Big debate even among the nobel prize winning laureates as to what kind of tax cuts and spending increases best increase the GDP and hopefully the employment numbers and other economic numbers. I've noticed that some of the debate is academic (How would this best increase GDP overall? How would this decrease unemployment overall?) and some of it is philosophical (what kind of world do we wish to live in? What distribution of income would we like to result from this tax cut, etc?).

Many of the economists that signed the statement against Bush's stimulus plan are on record elswhere as having said they do agree that a tax cut is a good idea but disagree as to the size of the tax cut, the distribution of the tax cut, and the permanence of the tax cut. Some of these questions are academic and some philosophical.

Some of the economists that signed the statement in favor of Bush's stimulus plan said so for philosophical reasons (Nobel prize-winner Milton Friedman said that reduced taxes in turn force lesser expenditures and hence a smaller government). Others thought that tax cuts are always a good idea regardless of where they occured.

The big unknown in a formula is the multiplier on spending. Every dollar you spend gets spent again and again. How many times? Where would one best input money into the economy to get the fastest GDP growth? My gut feeling is to get into the hands of lower class people as they have lower savings rate. This of course ignores the philosophical debate (who deserves the tax break more?).

Wasn't a non-permanent tax-cut decided on anyway which is what a majority of Democratics wanted in the first place?

wig · 06-09-2003

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Originally posted by Colin+Jun 9 2003, 11:59 AM-->
QUOTE (Colin @ Jun 9 2003, 11:59 AM)

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06-09-2003 #55

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Quote:

Originally posted by Vick@Jun 9 2003, 01:00 PM
ok now that Wig and Colin (as well as many other fine minds) are here please give me a little help (maybe you can figure out the formula if there is one)

Is the current tax cut (actually a rebate as checks are going to be sent out) going to stimulate the economy enough to offset the reduction in the actual tax base ($ the gov have to spend) ?
Will the tax cut add more revenues to the tax base due to growth the rebate will provide?

I'm under stand supply side and trickle down (and am a fan of both)

But I'm also a firm believer in tax cuts/rebates should be equal to reductions in spending - then we don't have the situation we had in the late 70's- early 80's where the USA ran at a huge deficit (which caused the USA to use up available funds which gave us some inflation and higher interest rates - to some degree)

Vick,

I don't really know.

I am for tax cuts because I believe that the Federal Gov't wastes money on things that do not impact me and/or that I do not agree with.

I don't mind paying taxes, but I feel if the gov't was fiscally responsible, my tax rate would be lower so I am for lower taxes (actually would prefer consumption tax). I am against many of the areas that the federal gov't has its hands in and i do not think in many regards it serves the better good of the ppl like it's all cracked up to be.

It's all the principle of it to me.

However, being the calculating bastard that i am, I really don't care what happens. I just watch the motion and try and buy low and sell high. LOL

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06-09-2003	#52
Vick Celebrating Company's Success with A Beer From Mini Bar Want to see your own Advertising Here! Join Date: Oct 2002 Location: Little South of Sanity Posts: 6,551	ok now that Wig and Colin (as well as many other fine minds) are here please give me a little help (maybe you can figure out the formula if there is one) Is the current tax cut (actually a rebate as checks are going to be sent out) going to stimulate the economy enough to offset the reduction in the actual tax base ($ the gov have to spend) ? Will the tax cut add more revenues to the tax base due to growth the rebate will provide? I'm under stand supply side and trickle down (and am a fan of both) But I'm also a firm believer in tax cuts/rebates should be equal to reductions in spending - then we don't have the situation we had in the late 70's- early 80's where the USA ran at a huge deficit (which caused the USA to use up available funds which gave us some inflation and higher interest rates - to some degree) __________________ Pssst Click the Button Above I once wanted to be a Gynecologist But I couldn't find an opening

06-09-2003	#53
Almighty Colin Members Want to see your own Advertising Here! Join Date: Oct 2002 Posts: 8,059	Vick, The government is spending more money AND cutting taxes so there's not truly an offset. Now, THAT'S stimulus. ;-) No one knows the answer to that question though. Big debate even among the nobel prize winning laureates as to what kind of tax cuts and spending increases best increase the GDP and hopefully the employment numbers and other economic numbers. I've noticed that some of the debate is academic (How would this best increase GDP overall? How would this decrease unemployment overall?) and some of it is philosophical (what kind of world do we wish to live in? What distribution of income would we like to result from this tax cut, etc?). Many of the economists that signed the statement against Bush's stimulus plan are on record elswhere as having said they do agree that a tax cut is a good idea but disagree as to the size of the tax cut, the distribution of the tax cut, and the permanence of the tax cut. Some of these questions are academic and some philosophical. Some of the economists that signed the statement in favor of Bush's stimulus plan said so for philosophical reasons (Nobel prize-winner Milton Friedman said that reduced taxes in turn force lesser expenditures and hence a smaller government). Others thought that tax cuts are always a good idea regardless of where they occured. The big unknown in a formula is the multiplier on spending. Every dollar you spend gets spent again and again. How many times? Where would one best input money into the economy to get the fastest GDP growth? My gut feeling is to get into the hands of lower class people as they have lower savings rate. This of course ignores the philosophical debate (who deserves the tax break more?). Wasn't a non-permanent tax-cut decided on anyway which is what a majority of Democratics wanted in the first place? __________________ Almighty Content. Your one stop for live content. Secret Friends, LATINA Secret Friends , My Cam Friends