The Stimulus Package

[TheGame]

Once again, please show evidence that decreased taxes equals increased spending.

Nice way to ignore:

I take any gross income chats with a grain of salt, how about some NET incoming numbers for the last 10 years, taking into consideration the spending too and not just the raw revenue that the governemnt has gained.

I have 7 minutes until I take off for work, but this is the #1 point I want to reply to. From 1999 to 2009, have taxes been lowered or raised? From 1999 to 2009 has spending been lowered or raised? I don't need to find a graph to show this point. Because you KNOW what the facts are.

Lets make it high school level so that everyone can understand the flaw in what you're saying and the flaw in that graph. Lets say Mcdonalds drops the price of their big mac, and the graphs show that their GROSS income is the same, and the amount of customers have risen. That's pretty much what Bond's chart illustrates.

GDP (On his chart would equal the cusotmers on the mcdonalds chart) went up, while taxes (which would be the price of the big mac on the Mcdonalds chart) went down. And GROSS revenue stayed the same. If you posted a chart like this, it makes it seem like its favorable to drop the price of the big mac because you service more customers.

But wait!

Since you have more customer's you have to hire more people, and you need more equipment to service them. So while your gross income stayed the same, and your customer amounts went up, your SPENDING went up also. So that chart suddenly is deemed pointless by the fact that yor NET income went down.

What the goverment is doing now, is like what would happen when Mcdonalds goes bankrupt. Now the spending jumps up a ton, because they're trying to save their asses by taking out loans to get themselves out of their current bad situation.

That's why a chart that shows gross income while ignoring spending is bullshit and misleading. Have a nice day and see you guys in 9 hours.

[Professor S]

Originally Posted by TheGame

Nice way to ignore:

I didn't ignore it, I told you it was the DEFICIT. Turn on the news and you'll hear all about it. Its not like its some tightly held secret.

I have 7 minutes until I take off for work, but this is the #1 point I want to reply to. From 1999 to 2009, have taxes been lowered or raised? From 1999 to 2009 has spending been lowered or raised? I don't need to find a graph to show this point. Because you KNOW what the facts are.

Lets make it high school level so that everyone can understand the flaw in what you're saying and the flaw in that graph. Lets say Mcdonalds drops the price of their big mac, and the graphs show that their GROSS income is the same, and the amount of customers have risen. That's pretty much what Bond's chart illustrates.

GDP (On his chart would equal the cusotmers on the mcdonalds chart) went up, while taxes (which would be the price of the big mac on the Mcdonalds chart) went down. And GROSS revenue stayed the same. If you posted a chart like this, it makes it seem like its favorable to drop the price of the big mac because you service more customers.

But wait!

Since you have more customer's you have to hire more people, and you need more equipment to service them. So while your gross income stayed the same, and your customer amounts went up, your SPENDING went up also. So that chart suddenly is deemed pointless by the fact that yor NET income went down.

What the goverment is doing now, is like what would happen when Mcdonalds goes bankrupt. Now the spending jumps up a ton, because they're trying to save their asses by taking out loans to get themselves out of their current bad situation.

That's why a chart that shows gross income while ignoring spending is bullshit and misleading. Have a nice day and see you guys in 9 hours.

Game, none of anything you have posted has any meaning at all when faced with the fact that regardless of tax rates government revenue remains a constant percentage of GDP. KNOWING this is the ONLY CONSTANT OVER 100 YEARS, shouldn't we manage our SPENDING not our TAXES RATES? Your anecdotal evidence holds no water here. Please find real evidence from an equal sample base. All I ask is quid pro quo.

And I'm sorry, but your McDonalds metaphor makes absolutely no sense. Your assumptions are incorrect, since the added cost of hiring and developing product is absorbed by the private businesses we tax, and not by the government itself. When a company hires an employee, it is because they want to INCREASE REVENUE. If it does not profit, they don't do it or as we have seen they cut the spending (unemployment rising). When was the last time you heard of the government laying people off when their revenues dropped?

To continue your business example, we are in trouble because we borrow more money than we bring in and invest them in areas that have no chance to grow revenue. I'm not saying that the government should spend to make money back, but knowing this is the case we can't make the same decisions that a business would. We have to base spending on revenue, and not attempt to increase revenue by increasing spending. The nature of government spending is to support the public, not profit from them. We tried to profit from investing in bailouts once during the late 80's and took a bath on the investment, selling the investment for pennies on the dollar.

Government revenue is currently plummeting due to a lower tax base and a lack of pressure on wages, and to respond we are hiring more government employees and spending more money than at any point of our history.

HENCE WHEN YOU SPEND MORE THAN YOU BRING IN YOU GO BANKRUPT. To use your languagem you shouldn't need a high school example to understand this. All you need is a credit card.

Clinton was able to balance the budget on historically lower taxes, so why are you so convinced that the idea is a myth?

[Professor S]

Hopefully the following will put this very frustrating argument to rest.

The results of this more reliable test indicate that tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent.

http://www.nber.org/digest/mar08/w13264.html

OECD in Figures (2003) shows total taxes as 45.3 percent of GDP in France, compared with 29.6 percent in the United States. But it would be a mistake to conclude that the higher average tax burden in France is a result of that country’s more steeply graduated income tax. French income tax rates claim half of any extra dollar at incomes roughly equivalent to $100,000 in the United States, and exceed the highest U.S. tax rates at even middling income levels. Yet these high individual income taxes account for only 18 percent of revenues in France, about 8.2 percent of GDP, while much lower individual income tax rates in the United States account for 42.4 percent of total tax receipts, or 12.5 percent of GDP. Countries such as France and Sweden do not collect high revenues from high marginal tax rates, but from flat rate taxes on the payrolls and consumer spending of people with low and middle incomes. Revenues are also high relative to GDP partly because private GDP (the tax base) has grown unusually slowly, not because tax revenues have grown particularly fast

http://www.econlib.org/library/Enc/M...-105_table_032

[TheGame]

And I'm sorry, but your McDonalds metaphor makes absolutely no sense. Your assumptions are incorrect, since the added cost of hiring and developing product is absorbed by the private businesses we tax, and not by the government itself.

My point wasn't to illustrate that the government goes through the exact same cycles as a single buisness. My point was to illustrate that a GROSS INCOME CHART by its very nature is meant to be misleading.