Everyone got an extra three days to deal with their taxes this year. Hopefully everyone got to enjoy a little bit of weekend not fretting over their returns.
When I was growing up my mother always said there were three things that were certain in life: death, taxes, and your mother loves you. Lately it seems there is a segment of our American society that feels entitled to be exempt from that second item.
And taxes look to be the big election year topic on the political agenda. Congressional Republicans and the White House have made their long term budget deficit slaying plans and they roughly agree on the amount ($5–6 trillion) and how long to plan for it (ten years). What they don’t agree on is what is to be affected. House Republicans want to extend the Bush Tax cuts and balance the budget on middle class entitlement programs, essentially privatizing Medicare. The White House looks to be planning to belatedly keep its promise to let the Bush Tax cuts expire and increase revenue largely by allowing tax rates to return to Clinton era rates.
But Jon Stewart explains this far more eloquently than I do. Stewart counters Ryan’s graphs showing what effect his budget cuts would have over the long term with his own graph demonstrating the effect letting the Bush Tax cuts expire would have. The end results are the same.
America has had one form of taxation or another based on the trade of things of value since its inception. This country was arguably founded on a tax revolt as Tea Partiers are so fond of reminding anyone withing earshot. It’s mentioned in the Constitution but up until the need to finance the Civil War the country relied mostly on tariffs. The war between the states 150 years ago brought about the first income tax. These days it seems we tax so many things that Americans have become numb to the amount of our money we spend on taxes. Cigarettes, alcohol, gas, estate taxes, gift taxes, local, state, and federal taxes, income and sales taxes. If it’s worth a dollar to someone, Uncle Sam gets a slice of the pie.
The chart on the left illustrates the rank of American income tax revenue compared to other countries. We actually rank fairly low as far as first world countries go.
But not everyone pays taxes. Yesterday on one of the Sunday talk shows a pundit from CNBC estimated that 47% of people and corporations do not pay taxes at all to the tune of $300 billion in lost revenues per year. And everyone has probably heard of the GE story where the corporate colossus earned $14.3 billion in profit yet paid no taxes at all. In fact, they got a $3.6 million credit from the government.
Here is a historical perspective of tax rates of the past century in America. Notice the precipitous drop in the late seventies. Ronald Reagan would sign one of the biggest tax cut bills in history during his two terms.
Courtesy Reyes Financial
Corporations have taken to moving their headquarters to places like Switzerland in order to take advantage of their more competitive tax structure. In the below interview on 60 Minutes, the CEO makes a compelling argument for lowering the corporate tax rate to be competitive with these countries where American companies are offshoring.
Many believe that reform of the tax code is long over due. That would allow the corporate rate to be dropped while closing many of the loopholes that corporations take advantage of today allowing companies to re-invest in American jobs while being competitive in the world market. Additionally it would clean up a great deal of the inequity of tax burden on regular citizens. Meanwhile, it becomes less clear that there is any reason at all to extend the Bush Tax cuts for the wealthiest people and corporations in our country.
Usually it is political suicide to suggest a tax increase (even though it would technically be the lapse of a ten year tax holiday) right before an election. I rather think the Republicans have gone way out to the fringe in pushing the permanent extension of the tax cuts during hard times. The idea that giving tax cuts to the wealthy to create jobs has worn a little thin with much of the public and it appears that during this election year, we are going to have that conversation.
Related Articles
- Greenspan Says U.S. Should Let Bush-Era Tax Cuts Expire (businessweek.com)
- Obama First To Put Tax Increases On Budget Table (huffingtonpost.com)
- If the GOP won’t negotiate over taxes, then let the Bush tax cuts expire (dailykos.com)
- Jon Stewart’s must-see takedown of Paul Ryan (dailykos.com)
- Tax Facts (krugman.blogs.nytimes.com)
- Ryan, Geithner at Odds Over Republican Support for Debt Increase (businessweek.com)
- “Top Ten Tax Charts” (economistsview.typepad.com)
538 Refugees 
I do wonder if they are exempt from paying taxes because their mother didn’t love them enough….. I don’t mind paying taxes, and am always surprised at how little I do pay, especially as I pay no state income tax at all. I do find though that I wish I could earmark my taxes for things I would prefer the government to do. I would surely prefer to pay the salary of the custodians for the Senate buildings, than to continue to finance certain “military actions”….I think if we were able to ear mark a portion of our taxes, that would give the citizens much more power than the vote does.
Point 1: Everyone does pay taxes. Some pay no federal taxes, but unless you live in a shack in the woods on land you don’t own, eat pine cones and never buy anything, you pay taxes. Right now if you add together all the taxes we pay, federal, state, local, income, payroll sales, excise, property, yes and even indirect corporate taxes on the rich. Warren Buffett pays 11% on his 2006 $8 billion investment gain (in 2006 -that’s the last year he released his tax info). A minimum wage worker pays 37%. How about merely having the wealthy pay their fair share? How about having them pay even the same percentage on investment gains that worker do on wages. It’s all laid out at http://fairsharetaxes.org along with a proposal for a vastly simplified, fair tax code for all levels of government.
Point 2: You can fix Medicare, Medicaid, (and health care costs in general, a boon to US business) by codifying the Mayo Clinic system, which removes incentives for over-treatment, Delivers Better Results, and Costs 28% Less. Add to that allowing the government to negotiate with pharmacutical companies. Then finally cut defense spending 10% – we would still be spending 3 times more than the next most militarized country. All you have to do is reform our basically corrupt governmental system, so the medical-military-industrial-complex lobbyists are not running the show.
Institute Points 1 & 2 and what do you get? Surpluses as far as the eye can see. We could cut middle-class taxes, completely pay off of our national debt in 15 years and invest in the infrastructure (education, research, roads, etc.) that would make the economy flourish, to the benefit of all: poor, middle-class and rich alike.
Revenue up over 5% annually between 1980-2008, in spite of major tax cuts. Revenue is not the issue.
@rgbact — You’re correct, that pointing to “revenue” (or to “spending”) is too simplistic.
Our current deficit is due to a) the Bush tax cuts, b) Bush’s unfunded Medicare Part D, 3) two unfunded Bush wars, 4) the Bush recession (which has dramatically reduced consumer demand and, therefore, economic activity), 5) interest payments on the Bush / Reagan national debt, 6) bloated military spending, and 7) temporary emergency measures designed to deal with the Bush recession. Beyond the question of just the deficit, the question of “Who pays?” must be reassessed; the tax burden has increasingly shifted to the poor and middle class, which is further depressing economic activity.
There are other long-term issues; we do have to fix medical care, for example. The PPACA was a step in the right direction, but a universal single-payer system would be a lot better. But the current deficit is due to the issues I described above.
US Population up 36% between 1980 census and 2010 census as well though. Revenue is part of the problem.
DC,
Of the seven reasons you listed, #5 is vanishingly small in comparison to the others. It’s hard to tell just how bloated military spending really is, either. It’s a big part of our annual expenditures, but how much of that is “bloat,” and how much of that is merely the cost of opting to be the global police force?
WE’RE BACK ONLINE!!!
Mizunogirl, that’s an interesting idea. I wonder, if the tax form listed a series of boxes you could click indicating where you wanted your money to go, which ones would get the most response?
Even if they had no ultimate intention of following the stated wishes of taxpayers, it would be an interesting exercise to put a section like that on the form and see what people really hold as priorities.
Of course, part of the problem is that people overestimate by orders of magnitude how much we spend on foreign aid, Corporation for Public Broadcasting, and Planned Parenthood. This is why they are willing to believe that all you have to do is cut those things, and everything will be back to normal.
It’s as if the average taxpayer thinks annual trips to Europe would cost their families about $200, so there’s no need to stop those; but if they just took shorter showers, they could fix their monthly $2000 deficit.
@Michael
Of the seven reasons you listed, #5 [interest on the national debt] is vanishingly small in comparison to the others.
If I remember correctly (and I may not — and I don’t have the leisure to check just now, so I’m open to correction) annual interest payments on the debt amount to about $200 billion, thanks to the low interest rates. Again, if I recall, the entire discretionary Federal budget, minus Defense, is about $400 or $500 billion. So yes, the interest payments are “vanishingly small” compared to the other factors I listed. Which means the entire discretionary budget (miniscule parts of which is what the Republicans have been demonizing) is about 2-to-2.5 times “vanishingly small.” This rather underscores the absurdity of the argument that the way to get rid of the deficit is by “cutting spending” — especially if all we’re going to do is kill Big Bird and allow polluters to pollute with no one watching them.
It’s hard to tell just how bloated military spending really is, either. It’s a big part of our annual expenditures, but how much of that is “bloat,” and how much of that is merely the cost of opting to be the global police force?
A reasonable point. We’re about 40 – 45% of the world’s total military budget. And what good does it do us? Being the “global police force,” we can’t even arrest one guy in the mountains between Pakistan and Afghanistan; and when we do arrest people charged with being his friends, we can’t bring them to trial. So I think we’re paying too much for the service we get.
Brian-
Thats about 1.1% annual population growth. Still leaves about 4% annual growth. Also, I’d expect alot of services don’t cost anymore with more people. You know, the “economies of scale”the govt is supposed to have.
Also, what does funded war mean? Is it something you save up for? You make as if its a luxury item. Have we done it in the past?
rgbact,
You might want to notice that, over the years 2000-2008, expenditures increased at an average annual rate of 6.6 percent, while revenues over that period increased at an average annual rate of under 3 percent. This coincides with the period that the Bush tax cuts have been in effect.
It would appear, based on the simplistic method implicit in your comment above, that we have both an outgo and and income problem. I know a simple method of solving one of them, requiring us to do nothing.
@rgbact
Also, what does funded war mean? Is it something you save up for? You make as if its a luxury item. Have we done it in the past?
Yes.
When Bush 1 committed Gulf War 1, he obtained tax money to pay for it.
After WW2, America raised the top marginal tax rate to 92% to pay for it; and during the war (also during WW1), America sold war bonds to its citizens to pay for it.
Particularly in the case of the invasion of Iraq, it was indeed a luxury item. There was no legitimate reason or legal excuse to invade Iraq. Dick Cheney promised it would cost, at most, $10 billion, be over within a couple of months, and pay for itself through increased oil revenues.
So yes, wars are always paid for, usually (as with WW1, WW2, Gulf War 1, and even the Civil War) through increased taxation (the income tax was created specifically to pay off the Civil War debts).
“Brian-
Thats about 1.1% annual population growth. Still leaves about 4% annual growth. Also, I’d expect alot of services don’t cost anymore with more people. You know, the “economies of scale”the govt is supposed to have. “
Valid point. I misread your post. My bad.
rgbact,
One thing to keep in mind about economies of scale is that they often become irrelevant beyond a certain point. That is, there is a point at which the per-unit cost is lowest, and increasing scale beyond that point ends up increasing the per-unit cost. This is typically true at a lower threshold for government than for business, due to the lack of external pressures that would otherwise force a heavy emphasis on cost reductions.
Government is good for several things, but economies of scale is not one of its greater strengths.
DC said:
Our current deficit is due to a) the Bush tax cuts…… and the rest of your 7:55 post is directly out of the leftwing and Obama talking point playbook. It is of no factual basis.
First, let’s deal with your first claim. From 2004 to 2007, federal tax revenues increased by $785 billion. That’s the largest 4 year increase in American history. So how exactly did that increase revenue lead to our current deficit?
GROG,
And, from 2004 to 2010, federal tax revenues were completely flat. What does that prove?
Also, it isn’t the amount but the percentage that matters.
Three years picked like a cherry are not sufficient to conclude anything. It’s just statistically dishonest.
Grog,
The DOW was substantially flat from the time Bush took office until mid-2006. Any increases in tax revenue were due to the increases in population, and artificially increased economic activity because of easy credit. The easy credit was what the Bushies substituted for actual economic growth, since the number of jobs and household income remained essentially flat, just like the DOW.
The CBO has scored the Bush tax cuts as causing an additional $700 billion to $1 trillion loss in revenue over the next ten years. It’s an absolute revenue killer for the Federal government. It only stands to reason; you reduce your hourly pay, your income goes down.
And you can call the other items “talking points” if you want. It doesn’t make them untrue. Example: $1 trillion in direct costs for two unfunded wars. Perhaps $3 – $4 trillion in additional costs (lost economic activity and wages, medical care, veterans’ benefits, etc., not to mention the costs of rebuilding Iraq). As far as the unfunded costs of Medicare Part D, even Republicans agree with that one. Etc., etc.
Those are the causes of our deficit.
SC,
DC’s claim is that the Bush tax cuts lead to the current deficits. I’m just asking him to prove how an increase in tax revenue lead to the current deficits.
And, from 2004 to 2010, federal tax revenues were completely flat. What does that prove?
The first round of Bush tax cuts were nothing more than Keynesian stimulus handouts that didn’t work. The next round of Bush tax cuts went into effect in 2003 so 2004 seems like a fair starting point. Nancy Pelosi and the Dems took full control of Congress in 2007 so that seems like a fair ending point. Democrats controlled the entire federal government from 2009 until the end of 2010 when the failed Obama stimulus took place.
GROG,
I can’t tell whether you’re being obtuse or intentionally misleading with this:
He claimed that it was a contributing factor. Clearly if you throw two wars on top of the increased revenue, you end up with a bigger deficit.
Perhaps because Keynesian countercyclical policy is not implemented through tax cuts. In other words, they not only were not “nothing more than Keynesian stimulus handouts,” they were nothing like Keynesian stimulus handouts.
GROG,
Please. How did the Democrats taking over Congress affect the revenues? They didn’t.
They could affect spending — but only with the aid of President Bush and the Republicans in the Senate, many of whom are still there. And, in point of fact, spending did increase faster in 2007-2010, but you might also notice that there were some other things going on that could justify that.
I understand, you want to pretend that everything is the fault of the Democrats, because you think people here put all the blame on the Republicans. But the right way to do that is to point out honestly that it isn’t all the fault of the Republicans, not to dishonestly try to pretend that it’s all the fault of the Democrats.
Michael,
How then was an increase in revenue of $735 billion a contributing factor to today’s deficit?
In other words, they not only were not “nothing more than Keynesian stimulus handouts,” they were nothing like Keynesian stimulus handouts.
It was Keynsian in that Bush hoped the 2001 “cuts” would jump-start the economy through increased consumption by putting a few extra dollars in Americans’ pockets.
Grog, you have offered no evidence that the increase in Federal revenues had anything to do with the tax cuts. You have offered no mechanism to support your hypothesis. In fact, the healthy economy that Clinton left us with was able, for a time, to undo the negative income effects of the tax cuts.
Indeed, the Federal budget went from a surplus of about $300 billion in 2000 to a deficit of around $400 billion after only a couple of years of Bush, and the annual deficit remained in the hundreds of billions until the Bush economic collapse. The Bush tax cuts contributed significantly both to the deficits and to the subsequent economic collapse.
DC,
Clinton left us with a healthy economy? Bush inherited an economy on the brink of recession after the dot com bubble burst in 2000. It was hardly a healthy economy.
DC’s,
Conservatives argue that lowering taxes will stimulate the economy. When we actually do lower taxes and the economy is actually stimulated and it corresponds to exactly when taxes were lowered, you then claim it had nothing to do with tax cuts.
Grog, economies go through cycles. The mild recession at the beginning of the Bush administration was no exception. The fundamentals at the time really were strong 🙂
It took Bush to turn the eight years of Clinton prosperity into a desert for the middle class, culminating in a collapse of historic (dare we say biblical?) proportions.
Conservatives argue that lowering taxes will stimulate the economy.
And will increase revenues, and cure the common cold, and make you trim and attractive, and give you whiter teeth. I’ve never seen an ailment that conservatives say won’t be cured by tax cuts.
But I have also never seen any mechanism that would cause the magical effects, and no model that honestly describes where we supposedly are on the Laffable Curve.
We can also honestly say that increasing the marginal tax rate to 92% after WW2 paid off the WW2 debt and led to three decades of economic growth.
This stuff makes me dizzy sometimes. Lets see:
1)Bush easy credit and tax stimulus=bad, Obama easy credit and spending stimulus=good.
2)Clinton internet bubble=economy loved those tax hikes, Bush credit bubble=all Bush’s fault
3) Iraq=unfunded, unneccesary war. Libya+Aghanistan escalation=give peace a chance.
4) Bush Gitmo=Bush is a torturer, Obama Gitmo=keeping America safe.
5) Ryan Medicare cuts=killing granny, Obama Medicare cuts=bending the cost curve.
6) Bush’s $450B largest deficit=Bush was out of control, Obama’s $1.6T record deficit=Obama is a fiscal hawk
You’re right Grog—the libs are sticking to Bush talking points. The 2012 campaign will be all about Bush…again, not Obama.
The 2012 campaign will be all about Bush…again, not Obama.
Nope. It’ll be about Privatizing Ryan.
Well said rgbact. Better than I could have ever done.
rg,
That last comment of yours was so full of inanities that it is almost beneath rebuttal. But,
3) Iraq+no, zero, nada, zip justification and was built on lies; Libya+Afghanistan+LOTS of left wing criticism. Your “give peace a chance” truly bullshit.
4) Gitmo= STILL a hellhole that costs us more in Islamist recruiting appeal than it’s worth to us. A win for the ideologues and the NIMBY’s. And STILL criticized by the left.
5) Ryan Medicare cuts = killing, not just granny, but Medicare as we know it; Obama Medicare cuts=Money cut from the pockets of the supplemental insurers, NOT the delivery providers. Be knowledgeable about that which you speak and don’t just take Glen and Rush’s word for something. Again, “bending the cost curve” just bullshit.
1 – 2 – 3 strikes and he’s OUT!
Go out and get some credibility before you try another at bat.
Reports coming in on today’s TeaParty Tax Day protests and the attendance seems to be in the HUNDREDS, down 90% from a couple years ago.
Seems a real growth movement out there.
Too bad Mr DePalma’s not here to give us the inside scoop.
Max-
You might read up on Obamacare before you call me out on my facts.
rg,
Sho’ ’nuff, son. Glad to:
From PolitiFact in August 2009 on the subject of “ObamaCare” and the $500M in Medicare cuts. This snippet is from about 20 paragraphs down:
“We asked experts from both sides of the debate whether all these changes constituted a cut, and most had the same answer: yes and no.
On one hand, they might not be considered cuts because nowhere in the bill are benefits actually eliminated, they said. And other parts of the bill expand coverage for seniors and ultimately make some components of Medicare less expensive for patients. For instance, the bill would require the pharmaceutical industry to help pay for prescription drugs. That savings will ultimately help the government cover more drug benefits for more patients. ”
Please, sir, you are to smart and too worthy an opponent to fall for the RushBeckistan scream machine.
All, and rg: Please forgive my touch of snark earlier. I have a close friend who is in his final days of battling cancer, so my disposition is not the best. Not an excuse, but I can let it get ahead of me these days.
GROG,
Simple. It wasn’t enough.
It takes an awful lot of squinting to consider a tax cut focused on the wealthiest the equivalent of Keynesian countercyclical economics. To do so is to equate “trickle down voodoo economics” with Keynesian countercyclical economics…which is essentially equating black with white.
rgbact,
Easy credit not good. I don’t care who’s doing it.
The internet bubble wasn’t so good, but it wasn’t caused by any government policy beyond opening a new frontier for commerce. New commercial frontiers tend to cause bubbles. What should have been done (but wasn’t) was a tightening of money around 1997. Of course, nobody wants to have the taps closed when the party is really swinging, so it doesn’t happen. I am fully ready to blame Clinton insofar as he had influence over the Fed (which is, for many reasons, minimal influence). I blame the Fed more, though they have to answer to Congress, who regularly threatens to pull power back from the Fed if they don’t do Congress’s bidding…so I blame Congress even more. And, of course, those members of Congress lack the intestinal fortitude to do the right thing when it comes to monetary policy, in part because the public doesn’t want the party to end…so I blame the voters as well. In all of this mess, Clinton is probably the cleanest, but more by accident than by design.
Iraq was both unfunded and unnecessary. Afghanistan has been funded, though I’m pretty ambivalent about that one. Libya should have far less US involvement. Don’t look to many on the left as being enthusiastic about any of those.
Really? I haven’t heard much support from the left for what he’s doing there. Though I can’t help but wonder what it is that he knows (and apparently Bush knew) that made him so willing to keep the place open after he got in office. Perhaps Bush was right to have opened the prison. The torture, on the other hand, is unacceptable, period. I know enough about that topic to know that it doesn’t work. I wish I could say more about that, but I really can’t.
It’s not about the number of dollars. It’s about where the dollars are being spent and how.
First of all, his largest deficit was significantly above $450B. Secondly, I don’t know who has called Obama a “fiscal hawk.” Perhaps you need to supply a quote from somewhere.
Max-
I posted that last week. Using their criteria–Ryan’s plan isn’t a cut. “Cut” is a fuzzy term in HC costing. Anyway, it calls into question Politifact’s impartiality. Not suprisingly, 3 of their 4 experts were from noted liberal advocacy groups.
Too bad Mr DePalma’s not here to give us the inside scoop.
Bartles made a post at Althouse a couple days ago. (3) eternal constants in life. Death, taxes and Bartles sayin’ everything bad in the world was/is Obama’s fault.
Again, all I ask for is consistency.
His one liner right after Obama was elected ~ Ain’t governing a bitch! which boehner is now finding out as he “tries” to keep his teabaggers happy.
rg,
So I guess the simple fact is that you then attempted to use the same set of facts to demagogue the issue. Come on, dude. You are better than that.
Michael,
The Bush rebate checks were handed out by the federal government creating a bottom tax bracket of 10% which had previously been 15%. The theory was that putting more money in the hands of the public would stimulate aggregate demand and investment.
Are you saying that’s not a Keynesian-type policy?
That “Keynesian stimulus” from the Bush tax cuts to the bottom 20 percent of taxpayers averaged 42 dollars, so the bottom 20 percent could buy a polo shirt (knockoff, made in China, not the authentic ones, which remained out of reach). One per household per year.
Meanwhile, the average tax cut to the top 1 percent allowed them to each buy and keep a polo pony (from Argentina or Brazil). Which may account for the recent popularity of polo in the American upper classes.
The top 400 income folks in the USA? They could each buy a stable of polo ponies, or a Congressman, whichever they preferred.
That’s really some “stimulus” — but the question remains: what did it stimulate?
That “Keynesian stimulus” from the Bush tax cuts to the bottom 20 percent of taxpayers averaged 42 dollars,
Wrong. The first round of rebate checks alone were $300 for singles, $500 for single parents, $600 for couples.
GROG,
We are talking about different things. You are talking about the “rebate” which was a one-time payment — and which may have had some stimulus effect. I was talking about the “Bush tax cuts.”
Which makes the point that we should be precise in our discussions, as there’s a menagerie of tax manipulations out there.
GROG,
I’m saying it was a drop in the bucket (and was intended as a bribe, not Keynesian countecyclical policy, anyway), compared to the tax cut on the wealthiest Americans. I’m further saying that the tax cut for the wealthiest Americans did far more damage to the economy than any marginal benefit of that one-time “rebate.”
I’m further saying that the tax cut for the wealthiest Americans did far more damage to the economy than any marginal benefit of that one-time “rebate.”
Under Bush the rich ended up paying more in taxes, the middle class ended up paying less in taxes, and the federal government brought in more revenue. How did that damage the economy?
Grog, the under Bush, the wealthiest in America saw their wealth skyrocket. They “paid more in taxes” because their incomes and their wealth grew at a far faster rate than the tax rate fell. They paid a smaller percentage of their wealth in taxes than they did in previous years.
The middle class saw their wealth decrease, and their income remain constant or decline. They “paid less in taxes” because they had less. If you impoverish a man, and tell him, “Cheer up! You’re paying less in taxes!” do not expect him to be grateful.
Population had grown, so naturally “the government brought in more revenue.”
The combination of a declining middle class and the rapid transfer of wealth upward destroyed the economy. Meanwhile, tax cuts for the wealthy, two unfunded wars, and an unfunded giveaway to insurance companies (Medicare Part D) led to massive and stifling deficits. Deregulation and a piratical financial policy led to worldwide economic collapse.
Where, in all this, is there a bright side?
DC-
Any words on Obama? Bush isn’ t president anymore—2.5 years now. Reagan cleaned up after Carter way faster than this.
Btw, would you support repeal of Medicare Part D and ALL the Bush tax cuts? Lets quit reliving Bush talking points and figure out what your man will do.
GROG,
Income taxes fell by 14% immediately after the Bush tax cuts. The overall tax revenue increase rate was unchanged after that, relative to that of before the tax cuts. In other words, revenues were simply lower with the tax cut than without.
Moreover, the effective income tax rate for the top quintile dropped as part of those tax cuts. Since a cut in effective income tax rates for the upper quintile has a significant detrimental effect on the economy (at effective rates below 30%, anyway), the tax cut on the upper quintile overwhelmed whatever minor benefit may have been achieved by that one-time payoff of the poor.
MW–
If my numbers are right, I have the deficit at $160B as of 2007. Not all bad. And thats with an Iraq War still ongoing. Bush may have been a tad irresponsible, but blaming him for the current deficit is way off.
Fact is, Bush’s tax cuts got more revenue–inspite of the internet bubble collapse. Obama’s stimulus however has seen a steep drop in revenue after the credit collapse.
rgbact,
The problem with using 2007 as a basis for “not all bad” is that 2007 should be compared to 2000. Both years represent the peaks of their respective economic booms. In 2007, the deficit was $152B (you were close). In 2000, the deficit was -$266B…that is, it was a surplus of $266B. So we’re looking at a spread of over a third of a trillion dollars between the two.
But, moreover, if you can’t get a surplus in the best years of an economic boom, then you’re completely lost. That is “all bad.” It’s not at all unusual or unexpected for government to run deficits during recessions, but it’s horrid to run deficits during economic booms. Those booms are supposed to be the times for which you reduce the accumulated debt to low levels, so that you have headroom in the future for the next recession. Or, if you’re really lucky, you never have that next recession…but we have yet to see that occur.
Fact is, the tax cuts didn’t “get” more revenue. The cheap credit (yes, that same cheap credit that you keep decrying) gave temporary support to the economy, and a better economy will produce more tax revenue for the same rates, by definition.
Considering that the credit collapse occurred before he was even elected, I don’t see how you are drawing a connection here. The stimulus probably improved the economy somewhat, but you should read “Re-ARRA-nging the Economy” before you talk with me about the stimulus. Otherwise, you’ll be throwing up a ton of strawmen, and we won’t get anywhere.
rgbact,
Sure, the decline in revenue from 2000-2001 was 1.6 percent, which doesn’t show a precipitous drop. Combine a recovery from a little dip (the bursting of the dot-com bubble affected only a small portion of the economy seriously) with the phasing-in of the Bush tax cuts and you don’t get much of a dip.
The decline in federal revenue from 2008-2009 was 16 percent! Note that this was before the “stimulus” could have been expected to have much of an effect on revenues.
You are like the guy saying “hey, I stubbed my toe!” to the guy who just got hit by a speeding Mack truck.
But the true test of any economic policy is over time. The Bush years started with a little dip, recovered slightly, and then went off a cliff. The Obama years started as the economy was still falling. Where it will end up nobody knows, but there are signs of recovery. And signs of continuing problems.
But you can’t simply take a couple of data points and claim that the Bush tax cuts increased revenue.
MW-
I somewhat agree with you on comparing 2000 to 2007. So, its about $430B variance. About $150B of that was for wars, which shouldn’t be ongoing spending if we win. Another $60B for Part D, which I said was a mistake. About another $100B from Medicare/Medicaid…which will pinch every budget from now on and make your “running a surplus in good times” basically impossible. So overall, not great, but not that bad.
rgbact,
Yes, it is that bad. We should never run a deficit during an economic boom. We should always run a surplus during an economic boom.
rgbact,
To elaborate further, the level of surplus that we should have had in 2007 is approximately $1.5T. So even if all of the things you listed were gone, the best we could have hoped for was well under a quarter of the proper amount for that level of economic activity.
MW-
That paradigm doesn’t work post 1965. The GOP simply will not allow massive tax hikes to keep funding out of control govt HC costs, so we have built in budget deficits from now on unless Dems hike taxes or massive Medicare cuts are made.
rgbact,
Assuming you’re right, the US is doomed. Seriously.
Population had grown, so naturally “the government brought in more revenue.”
Between 2004 (the year following the 2003 tax cuts) and 2007 (the year Pelosi took control of the House), federal revenues increased by $735 billion. That’s the largest 4 year increase in history. It was due to more than just population growth.
I’m still trying to figure out how the Bush tax cuts was a contributing factor for today’s deficits. And if you try to argue that the Bush tax cuts was the sole factor which caused the economic downturn, I think you’re being dishonest.
To say the housing bubble which started in the 90’s under Clinton and burst in the late 2000’s, and the continuing incursion of the government via Fannie and Freddie into private lending markets which forced private lenders to launch even riskier ventures to stay profitable did not have anything to do with the economic downturn, is just plain dishonest.
Those things had nothing to do with the Bush tax cuts and the Bush tax cuts had nothing to do with today’s deficits.
GROG,
It sure was. There was that easy credit thing going on.
Let me see if I can help you. The per-capita, inflation adjusted income tax dropped 14% from 2001 to 2002, even as the per capita GDP increased by 1%. If the federal government took in an additional 14%, we’d have a much lower deficit today.
And if you try to argue that anyone on this site has made such an argument, I think you’re being dishonest. Or obtuse. I’m still trying to figure out which.
And suggesting that the housing bubble started in the 90s is also dishonest. The economy-driving investments in the 1990s were primarily in the stock market. It was after the dot-com bubble burst that people shifted their investments to real estate.
Grog-
Agree. Question is, does a president take blame for Fed policy? Without the easy crredit, Bush tax cuts would’ve been a blip. He didn’t give out easy mortgages to people.
MW-
We’ll see if there’s a chance for a grand compromise to save us. Some long term spending caps along with jacking up the payroll tax? Otherwise there’s zero chance for a surplus until all the baby boomers are gone.
And if you try to argue that anyone on this site has made such an argument, I think you’re being dishonest. Or obtuse. I’m still trying to figure out which.
I’ve never seen DCPettersen ever blame anything or anyone other than Bush and Republicans for the economic collapse. If you’ve seen it, I would love for you to point it out to me.
Let me see if I can help you. The per-capita, inflation adjusted income tax dropped 14% from 2001 to 2002, even as the per capita GDP increased by 1%. If the federal government took in an additional 14%, we’d have a much lower deficit today.
Try to help me out a little more. How do you know what tax revenues would have been over his administration had he never lowered tax rates?
He inherited a near recession. Then 9/11 happened, dragging the economy down further. The he lowered taxes which stimulated the economy which lead to record tax revenues for the next four years. Why are you pointing to the 14% decrease from his first year in office, before the tax cuts had time to begin stimulating the economy?
rb, GROG, parksie, Mule, any conservative commenter or any liberal commenter for that matter:
I assume you to be familiar with Arthur Laffer and the Laffer Curve.
Please tell us precisely where we currently are on the Laffer Curve with the composite of Federal tax rates and give actual, independent data that proves your assertion.
Ahhh Max. Another one of your assignments for us righties.
Any economist, including Laffer, knows that economics is not a science, therefore it’s impossible to say “precisely” where we are on the Laffer curve.
GROG,
Fine. So just opine, for us (and, rgbact, if you wish, I extend this invitation to you): are we right about at the point where marginal tax decreases will give marginal revenue increases, or are is the derivative of revenue as a function of the tax rate 0 or negative?
Personally I think members of Congress should have to fill out their own taxes. Then maybe the tax code would finally get simpler. For more read: http://middleofthefreakinroad.com/2011/04/13/members-of-congress-should-have-to-prepare-their-own-taxes-2010-tax-code-irs/
Thomas,
I don’t know if filling out their own taxes would solve it, but I definitely agree that the tax code is overdue for a purge and simplification of the various deductions, loopholes, and various other adjustment possibilities.
That plus add a “millionaire” bracket or create a “wealth tax” as part of the reform to slow the growing wealth disparity while increasing tax revenues to combat the debt and deficit.
GROG,
That’s because you and I BOTH know that the entire GOP/conservative tax theory is based on that very inexact, unknown curve, preaching without fail, or knowledge, that we are on the right half of the curve.
In fact, precisely because NO ONE, not even Laffer, can show where we are on his curve, we may well have moved well to the left side as a result of Reagan/BushII tax cuts. And as a result, are choking off precious revenue that would help reduce the very deficit that we are crying about. But to make that admission would open the door to the fact of the possible mistake and, GOD KNOWS they won’t admit to any fallibility.
Max,
Economics and taxation is based on theory, not science. We can only look back and see what history tells us.
The tax cuts of the 1920’s – Revenues rose from $719 million in 1921 to $1164 million in 1928, an increase of more than 61 percent.
The Kennedy tax cuts – Tax revenues rose from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent.
The Reagan tax cuts – Tax revenues rose by more than 54 percent by 1989.
The Bush tax cuts 2003 – Tax revenues increased 38% by 2008 in the largest 4 year increase of revenue in American history.
GROG,
Your choice of end-points is just so precious. Why, for example, do you pick 1928 to post the end of the period? Could something have happened in 1929 that would have made a different result? How about 1969? 1989? 2007?
— “Lies, damned lies, and statistics” comes to mind.
GROG,
Your statistics have no context!!!!!!! Null context in relation to conservative tax theory and the Laffer curve.
1950 – Federal Tax Revenue $43.5 Billion
1960 – Federal Tax Revenue $99 Billion
That’s a 230 per cent INCREASE in that decade when the highest marginal rates were over NINETY PERCENT and corporations paid about one-third of income tax revenue versus 6% now.
Beats the holy hell out of EVERY number you just posted. BY DOUBLE
The “tax cuts” fixes the revenue problem is pure fallacy.
By empirical evidence.
Put it away, along with the Easter Bunny and the Great Pumpkin and the Tooth Fairy.
Oh, and BTW
The National debt was reduced from 88% of GDP in ’50 down to 54% during the same time.
And the Interstate Highways were significantly built and the beginning of the space program was funded and education was given high priority too!
Max,
That’s not so true anymore. We’ve gotten enough data points that the picture is starting to come into focus. And it seems that the answer to where we are on the curve depends on what income level we’re talking about. For those in the bottom two quintiles, we’re to the right of the peak. For those in the top quintile, we’re way to the left of the peak. For those in the middle, it’s still a muddier picture.
GROG,
Yes, but you need to make sure you don’t ignore any data, even if it doesn’t support your hypothesis. This is why regression analyses are so valuable. They automatically separate the signal from the noise. And it turns out that if you don’t limit yourself to a specific subset of the data chosen to support your existing conclusion, you find that the tax cuts are not the cause of the revenue increases.
In the 1920s, it was a loose credit market, virtually identical to the 2000s. Tax revenues were already on the rise before the 1961 cuts. The 1961 cuts reduced tax revenues in 1962, and then the previous trend of rising revenues continued as before. In other words, it simply shifted the revenue curve down, but didn’t change the slope. Interestingly, that, too, was the trend of the 2003 cuts. And the Reagan cuts. And the 1920s cuts, too. Hmmm…that only includes 100% of your examples.
Max,
You forgot that we were also paying for the Korean War at the time.
Put it away, along with the Easter Bunny and the Great Pumpkin and the Tooth Fairy.
The commenters around here are becoming so devoid of any desire to have reasonable policital discourse. I’m done here.
Thanks, MW.
Sorry you feel that way, GROG.
But if your arguments can’t stand up to fierce scrutiny, well then maybe they weren’t that good to begin with.
Best wishes!
Please come back whenever you are actually willing to scratch the surface.
SC-
I don’t believe in micromanaging the economy or the Laffer curve. Laffer curve is more a principle than something to be managed by economic puppet masters. I’m generally not in favor of lowering taxes as stimulus. More just out of general fairness.
Anyway, govt doesn’t make the economy go. It can be a helping/hurting hand, but 90% of our wealth is from increased productivivity in the private sector by improving products/services. Changing marginal tax rates doesn’t impact this much.
But if your arguments can’t stand up to fierce scrutiny, well then maybe they weren’t that good to begin with.
LMAO! What scrutiny?
My original argument was that tax cuts have not lead to deficits because they have historically increased revenue. I gave four examples of that in the past 90 years.
You have one example of tax increases (btw, I never said tax increases wouldn’t lead to increased revenues) which lead to increased revenues which just so happened to be right after the end of WWII when 10’s and thousands of GI’s were returning home from war. If those 92% tax rates were so great, why did Kennedy reduce them in the early 60’s? He must have been an idiot like me, huh?
Scrutiny! That’s the funniest thing I’ve heard in a long time!
rgbact,
It’s not micromanaging to say that, as things stand, those with high incomes could stand to pay a tax increase without reducing the amount of revenues, or if you believe the reverse, to say so. This is broad-brush economics, not tuning a racing engine.
You may like the “fairness” of lowering taxes — but as things stand, those with high incomes pay a smaller percentage of those incomes than those making peanuts. Is that really “fair”? You may say, like some, that it’s the absolute amount of taxes that matters — but that is hardly justifiable. The primitive herdsman who lost 10 from his flock of 40 sheep felt the loss far deeper than his neighbor, who lost 10 from his flock of 140.
It’s not an issue of what is more efficient. Things we all use and need in our daily life are paid for with government money. They cannot be efficiently run by private industry, so it’s an empty argument to compare the vaunted “efficiency” of private industry, since it does not apply. So we have to pay for them with government spending.
Sure, we can cut government spending, but there will be consequences. If you wish to simply assert that we can cut government until, under our existing revenue stream, it is paid for, then fine. Say so. Personally, I strongly suspect that, if that were done, the shock to the economy would complete the job the credit crisis started, and there would be a lot of people begging on the street or starving.
GROG,
MW also pointed out that there were holes in the logic. And gave specific reasons as to verifying through regression.
For myself, I’d prefer that you see those holes and at least be able to make an attempt to fill them. Not just leave challenged assertions dangling in the wind. Maybe do some regression and be able to show how much tax cuts contributed, along with the easy credit, population growth and other factors including the bubble of the period.
But that’s up to you.
And no one has called you an idiot, so don’t play the martyr card.
GROG,
I, too, challenge you to respond to my earlier analysis of the impact of tax cuts. Meanwhile…
As I recall, it was because that top rate was intended to be a very temporary measure to pay off the war bonds issued to pay for World War II. Once those were mostly paid off, the need for that high a revenue stream was reduced. It’s similar to the way that many bridges were funded by bonds, which were paid off by tolls, and once the bonds were paid off, the tolls were eliminated.
grog
“The commenters around here are becoming so devoid of any desire to have reasonable policital discourse. I’m done here.”
I can’t recall when you have attempted to have reasonable discourse.
Still hoping for intelligent right-wing participation.
Grog, you gave four examples of lowering tax rates supposedly increasing revenues. Michael showed that, in every case, revenues were already increasing before the rate reduction. In every case, the rate change caused revenues to drop in the next year or so. After that, revenues recovered, and continued to increase at about the same slope as they had before the rate change. All the rate changes did was to shift later years down.
Tax rate reduction does not increase revenue. In every case you cited it actually reduced revenues. In every case. 100% of the time.
“Sure, we can cut government spending, but there will be consequences. If you wish to simply assert that we can cut government until, under our existing revenue stream, it is paid for, then fine. Say so. Personally, I strongly suspect that, if that were done, the shock to the economy would complete the job the credit crisis started, and there would be a lot of people begging on the street or starving.”
Sadly, you’re probably right. But not for the reasons you suggest. You probably – but wrongly – think, just like most liberals, that considerable shrinkage of government programs and spending would result in societal chaos (begging/starving as you suggest) because they do such a damn fine job of providing a social safety net and making sure everything’s just a-okay from the time we’re born till the time we die and can be trusted (accountable to “we the people” right?) far more than the “private sector”….but the real reason is we’ve completely slipped as an individualist, do-it-yourself, personal responsibility culture to a nation of whiners, takers, somebody OWES me or needs to do it for me, something-for-nothing nincompoops who now rely on a (corrupt) central planning system to take care of nearly everything in their life but wiping their own ass…
I say you’re right that there would be begging and starving if the government was cut to nothing…..not because government is that “good” and private industry/free markets are that “bad” but because this ain’t the same America that beat back the British Empire for Independence, battled the western frontiers and tamed it while stretching this country to the Pacific, industrialized and led the world in patents in technology, won WWII, etc. That America is dead….and the one that’s replaced it is a pathetic shithole destined for failure…..on a path of policies provided by all of you nutjob statists who want even more people to rely on the “government” for everything.
@Grog
I’ve never seen DCPettersen ever blame anything or anyone other than Bush and Republicans for the economic collapse.
Nonsense. I also blame Reagan for popularizing the Laffer absurdity and the “gubmint is bad” meme.
Mule,
I know it’s going to be hard for you to believe this, but we’ve almost always been such a nation. By this, I mean that we’ve always had both the individualists and the whiners. The more complete history books are rife with both. What’s different is that the individualists had more control over what went into the history books, so we read about those people and not the whiners. And that creates much romanticism. But it doesn’t mean that the whiners weren’t there back then. Far from it; people were complaining about those very same whiners in the 1700s. And the 1800s. And the 1900s. And will probably continue to do so over the next century.
grog,
I can’t recall when you have attempted to have reasonable discourse.
Still hoping for intelligent right-wing participation.
Don’t worry drfunguy. I’m done with the insults here. I’ve been respectful of everyone here and treated them the same way I would in a face to face meeting. If the general consensus is that I’ve not participated in an intelligent manner, then I’ll leave.
DC said:
Michael showed that, in every case, revenues were already increasing before the rate reduction. In every case, the rate change caused revenues to drop in the next year or so. After that, revenues recovered, and continued to increase at about the same slope as they had before the rate change. All the rate changes did was to shift later years down.
Nonsense. Michael didn’t show that at all because it’s not true.
Between 1960 and 1963 revenues increased a meagre 14% or 3.5% per year.
Between 1964 and 1969 revenues increased by 66% or 11% per year.
Never did revenue drop during the 1960’s.
Max’s argument of the terrific 92% tax rates of the 1950’s is nonsense as well. As the decade ended, tax revenues were actually declining. They went from $80 billion in 1957 to $79.2 billion in 1959. The only other times in American history that we had 2 consecutive years of declining revenue were in the 1940’s when marginal tax rates were as high as 94% and the years following the burst of the dot com bubble and 9/11.
After a decade of high tax rates, surely Michael knows that the Presidential election of 1960 took place in a stagnating economy and Kennedy campaigned on a platform of trigerring economic growth through tax reductions that actually started in 1962, which (guess what?) lead to economic growth and got the country out of the recession of 1961. It was that jumpstart in the economy that lead to the increased revenues for the remainder of the decade.
If you can show we would have had the same amount of economic growth and more tax revenue if Kennedy had not cut taxes, please enlighten me.
The only other times in American history……
Post Great Depression
GROG,
You are basically taking differences in noisy data and claiming that some of them mean something, while others don’t. Don’t you understand the fundamental unsoundness of that method?
Take a look here, where the authors actually do the statistics.
That’s a pretty heavy slog, friends, so here’s a quote from page 26:
.
Given the size of our inherited deficit, it would appear that a modest, and carefully targeted, tax increase would have little effect on economic output.
“If the general consensus is that I’ve not participated in an intelligent manner, then I’ll leave.”
Don’t leave, dude. I need someone to help me to sling conservative fireballs at these people, and we can’t afford to lose any more people on this side.
Do what I do. Lump your audience into three different categories – the absolutely ridiculous, over-the top flamethrowers who have no interest in “reasonable political discourse” but merely want to pick fights, talk smack, insult, etc. (which usually includes Max, shiloh, Bartbuster, and occasionally others), those who are rigidly partisan and aren’t afraid to snipe at times but can usually be counted on for decent dialogue (dcpetterson, shortchain, et al), and those who are almost always genial, no matter which way they lean (MW, mclever, etc.) – and respond in kind.
Either completely ignore the over-the-top flamethrowers or just insult them (but whatever you do, don’t expect to get anything sensible out of them), engage the rigidly partisans in good, honest debate but don’t be afraid to be gruff when necessary, and be pleasant to those who are always pleasant to you.
Simple formula, it seems, but it’s hard to always live by when some of the jerks seem hellbent on riling you up….
Excellent advice, Muley.
I think the hardest thing for GROG is feeling outnumbered. It’s not pleasant when you’re all alone and five people are gunning for you. But it IS possible to even the odds by ignoring most of them and concentrating on the ones you really want to have a discussion with.
GROG,
I didn’t realize that you were so vague in your initial dates, and so I didn’t check them for accuracy in income tax rates. In any case, the important number to look at is inflation-adjusted, per-capita income tax collected. This eliminates other taxes, inflation, and the effects of population growth from the analysis.
In 1964, in 2005 dollars, the per-capita income tax was $1,957. In 1965, it was $1,952. That’s a decline, despite rising GDP and rising inflation-adjusted, per-capita income tax in the years before and after.
This shows what happens when you cherry-pick date ranges. Let’s shift it slightly:
Between 1960 and 1963, inflation-adjusted, per-capita income tax increased a meager 14%, or 3.5% per year.
Between 1964 and 1968, inflation-adjusted, per-capita income tax increased another meager 14%, or 2.8% per year.
Why the difference? Because 1969 showed a whopping 20% increase over 1968 revenues. And why did 1969 show a 20% increase in revenues?
Wait for it…
The top income tax bracket was raised from 70% to 75.25%!
In other words, the income tax revenues fell after the top rate dropped, and then continued to grow at roughly the same rate as before….and then jumped back up when the top rate rose.
And what happened to tax revenues 2 short years after the rate was increaased to 75.25%?
Wait for it……..
Revenue decreased 13% by 1971, in 2005 dollars!
GROG,
Yes, it did. The top tax rate was raised in 1968 and 1969, by a total of 7% and revenues dropped. The top tax rate was raised in 1993 by 9%, and revenues rose and continued to rise.
My point was (and is) that you were cherry-picking your years to support a predetermined conclusion. And that’s why I use regression analyses instead of choosing particular windows of time. The regressions take cherry-picking out of the equation, and provide enough data points (as long as you have enough data points to put in there in the first place) to get real results.
And the top rate is not a particularly good metric anyway, since it doesn’t tell us how many people pay that rate. Effective rates are a better metric, but we’ve only been able to track those since 1979. One gets much clearer correlations using effective rates than using nominal marginal rates. And that’s where we see that raising the effective rate on the top quintile of taxpayers has a beneficial impact on the economy, while lowering them has a detrimental effect…for the past three decades, and for effective rates between 13.7% and 17.5%.
This shows what happens when you cherry-pick date ranges.
I was not cherry picking date ranges. 1964 was the year of the Kennedy tax cuts. 1969 was the last year of the 1960’s.
Do you not see that Kennedy inherited a recession and to combat that he lowered taxes which in turn stimulated the economy? And you cannot ignore what you call “other taxes”. “Other taxes” also increase as the economy grows.
Do you not see that after the Kennedy tax cuts stimulated the economy for 5 years, it was then prudent to bump the rate up to 75.25%? How do you just dismiss the entire decade of growth and increased revenue and focus on one year and then dismiss the 2 following years in which revenue decreased?
Do you not see that there are other results of tax rates than revenue?
Unemployment was at 5.5% when Kennedy took office. It was down to 3.6% in 1968.
What was it following the tax increase of 1969?
Wait for it…….
4.9% in 1970 and 5.6% in 1972.
GROG,
Whether consciously or not, you did it.
Yes, I see that he did.
Yes. The principle of the Laffer Curve was being tested for the first time. Ironically, most Republicans voted against the cut, predicting financial ruin.
GDP growth for 1962 and 1963, before the tax cut, was 5% and 3%, respectively. Average GDP growth between that tax cut and the 1969 hike? 4%. And, lest you think that I’m stacking the deck on those years, here they are, from 1964 to 1969: 4, 5, 5, 1, 4, 2. No appreciable effect. This strongly suggests that economy was already recovering from the recession Kennedy inherited before the tax cuts were enacted…and that the tax cuts didn’t change the trajectory.
I don’t. I’m merely saying that you haven’t been looking at a statistically significant number of data points upon which to draw the conclusions.
You’re projecting an argument on me that I’m not making. I use regression analysis as a means of getting enough data points to make statistically significant conclusions. You are looking at individual events and claiming that they are representative of a trend.
Your method is advantageous when the big picture doesn’t support your conclusions. All you have to do is point out individual events and claim that they prove a causal relationship (which they don’t). And I can point to similar instances where the same input produced the opposite output…which I produce not to suggest that it proves a causal relationship (because it doesn’t), but rather to point out that, even applying a really really basic test, your hypothesis fails.
Looking at the bigger picture, which is what regressions do, your hypothesis fails pretty spectacularly. Mine does not.
And why did 1969 show a 20% increase in revenues?
Wait for it…
The top income tax bracket was raised from 70% to 75.25%!
And do you call that regression analysis, too?
Or as you said, did you “point out individual events and claim that they prove a causal relationship (which they don’t)”?
GROG,
I’m still having trouble telling whether you’re obtuse or intentionally misleading. Perhaps you could at least enlighten me as to which it is, for future reference?
What I was doing, to quote myself, is:
Michael,
Are you honestly asking me if I’m lacking intelligence? Is that a serious question or a rhetorical one?
I’ll copy and paste what you said again:
“This shows what happens when you cherry-pick date ranges. Let’s shift it slightly:
Between 1960 and 1963, inflation-adjusted, per-capita income tax increased a meager 14%, or 3.5% per year.
Between 1964 and 1968, inflation-adjusted, per-capita income tax increased another meager 14%, or 2.8% per year.
Why the difference? Because 1969 showed a whopping 20% increase over 1968 revenues. And why did 1969 show a 20% increase in revenues?
Wait for it…
The top income tax bracket was raised from 70% to 75.25%!
In other words, the income tax revenues fell after the top rate dropped, and then continued to grow at roughly the same rate as before….and then jumped back up when the top rate rose.”
You accused me of pointing “out individual events and claim that they prove a causal relationship”, and yet that’s exactly what you did.
Are you now saying you said that just to prove a point?
On a related note, the DOW closed at another post-crash high today. The DOW, all by itself, doesn’t prove much, other than (perhaps) indicating the willingness of investors to invest. It also seems to indicate that investors were not overly spooked by S&P’s negative statements about the future of America’s debt service. I suppose that makes sense; S&P helped cause the collapse in ’08 by some of their dishonest rankings, so I don’t see any particular reason to trust them now.
Anyway, the continually soaring DOW does seem to point in the direction of an ongoing recovery. Since the Administration’s policies went into effect in the spring of ’09, the DOW has recovered fast and father than at any previous time in its history. Obama must be doing something right.
GROG,
If you want to look at some serious hypocrisy, consider this statement: “I was not cherry picking date ranges. 1964 was the year of the Kennedy tax cuts. 1969 was the last year of the 1960′s.”
Do, pray tell, explain what makes a year ending in 0 so special as a financial point in time?
I read Michael’s comment, which you quote part of, where he picks a shifted date range, as making the point (which I have also tried to make) that picking dates and taking differences is simply “differentiating noisy data”, and cannot demonstrate even a correlation, let alone a causal relationship.
GROG,
Yes. That’s why I began it with “This shows what happens when you cherry-pick date ranges.”
Draw trend conclusions from individual events at your peril.
DC,
One thing you need to consider in trying to draw conclusions from the stock market’s rise this year is other investment opportunities. That is, assuming someone has money to invest, what options does that person have?
Interest rates remain at historical lows, so CDs, money markets, bonds, and the like are not particularly good choices. If it was the last decade, that would be driving people to put their money into real estate…but that is obviously not such a good choice right now.
Gold and other similar commodities were a good choice for a while, but there’s increasing evidence that metals are overvalued. That said, if you’re holding onto gold, it’s probably a good time to sell to the contingent who is certain that the US dollar will be worthless within a few weeks. 😉
That leaves equities, so there’s some inflationary pressure on stocks. One sign that the stocks have a similar overvaluation problem to metals is the P/E ratios. Too many of them are in the 30+ range, which isn’t healthy.
So, yes, the DOW has recovered nicely since late 2008. But I would caution against concluding that it’s a sign that Obama is doing something right.
OK Michael. I’ll take your word for it and I apologize. It was this last portion that threw me off your point.
“In other words, the income tax revenues fell after the top rate dropped, and then continued to grow at roughly the same rate as before….and then jumped back up when the top rate rose.”
I thought you were drawing conlusions from when the top rate rose.
But back to what started this dicussion. DC claimed that a reduction in tax rates was a cause of today’s deficits. I’ve been waiting for 2 days for someone to give some kind of statistical evidence to show that a reduction in tax rates lead to lower revenues and higher deficits, or that higer tax rates lead to higher revenues and lower deficits.
No one has been able to do it.
“Gold and other similar commodities were a good choice for a while, but there’s increasing evidence that metals are overvalued.”
*sniff* *sniff*
I smell a little weasel wording with an unbacked assertion. Pray tell, what is that “increasing evidence”? Simply that gold/silver prices have gone against liberals’ predictions?
Sorry, dude, this is one area you and your team were wrong. And you’ll continue to be wrong unless you admit to the underlying fundamentals driving the price increase for such things.
Michael
So, yes, the DOW has recovered nicely since late 2008. But I would caution against concluding that it’s a sign that Obama is doing something right.
🙂 It also depends on one’s meaning for the phrase “something right” — that is, what is “good,” and how can you tell? It also depends on what one thinks might have happened under other management. For example, if a theorist wants to claim other policies might have already driven the DOW to, say, 14,000 — and that this would have been a Good Thing — then a claim could be made that Obama is doing “something wrong.”
Economics is too slippery a thing to ever draw firm conclusions about much of anything — except, perhaps, that firm conclusions are almost always shaky. And any economic or historical argument can always been negated by simply stating, “I’m not convinced yet. Prove it some more.” (see: Grog.) And further, one must be wary of post hoc ergo propter hoc fallacies.
Nevertheless, I’m happy enough.
Folks,
I’m happy to say that my friend passed away late last evening.
I know that’s not the usual way to word such a statement. But, he was suffering from bone cancer and a brain tumor, and life continuing, such as it was, had no quality. He had accepted that death was near and was ready as one can be. His battle is finished.
Earl Marshal was not a sweet guy. He was a serious old reprobate who said how he felt and damn the consequences. If he didn’t like you, you had no doubts. A serious right-wing conservative, I can’t recall a dozen good words he had to say about our President. He LOVED the game of golf. Two rooms of his house were filled with collections of clubs and other equipment of all types going back 70 years. He volunteered and worked a number of PGA championships and US Opens. His collection of PGA and Open posters spilled out of those rooms and into his garage. He also had a fine collection of Native American themed bronzes and artwork, our common bond in art appreciation. He was able to spend his last nights at home and his final night in his recliner. Barely 24 hours before he left us, with several, of a steady stream, of friends stopping by, we were joking about death and it’s nearness for him. Another homeowner had one of Earl’s clubs showing him his swing, and Earl, literally on his deathbed, was critiquing the swing and giving advice.
I’m happy to say Earl is gone now, and I’ll miss the hell out of him.
“I’m not convinced yet. Prove it some more.” (see: Grog.)
Prove is some more? It was never proven in the first place. You can’t prove something “more”, when it has never been proven.
You guys make false statements like: In every case, the rate change caused revenues to drop in the next year or so.
And: The 1961 cuts reduced tax revenues in 1962. Are you being obtuse or intentionally misleading? Tax revenues went up in 1962. Look it up.
Both false statements and you wonder why I’m “not convinced yet”?
I’ll continue to wait until for you or shortchain or drfunguy or Max or Michael or anyone else, to give some kind of statistical evidence to show that a reduction in tax rates lead to lower revenues and higher deficits, or that higer tax rates lead to higher revenues and lower deficits.
GROG,
If it is not true that higher tax rates will provide higher revenues at some point, then we should simply cut taxes to zero, right?
No shortchain. If income tax rates were zero percent, there would be zero income tax revenue.
You need to look at revenue as a percent of GDP over the last 50 years. Regardless of tax rates, revenue has been between 15 and 20 percent of GDP, therefore it should be about 20%.
GROG,
So they did. They dropped in 1961. But there were no tax cuts in 1960, 1961, 1962, or 1963. They did drop in 1965, however.
Hold that thought…
“I’ll continue to wait until for you or shortchain or drfunguy or Max or Michael ”
Why thank you Grog.
I didn’t know you cared; and put me in such august company!
I rarely comment on economic matters as they are not my area of expertise.
😉
drfunguy,
Since you jumped in the middle of the conversation earlier and insulted my intelligence, I just assumed you had something intelligent to say on the matter. My bad.
@MW: Hold that thought…
I’m either confused or being obtuse. Why would I have to “hold that tought”?
Is it not a basic concept of liberalism/progressivism that raising taxes on the rich leads to more tax revenue and lower deficits, and reducing taxes on the rich leads to less tax revenue and higher deificts?
Since DC made the claim and implied that it had already been “proven”, I was hoping to hear from him first.
The proof and analysis should be readily available. It’s one of the core beliefs of the left and of the President and of the Democratic Party.
GROG,
Since it is clear that, if taxes were cut to zero, revenue would be zero, and if taxes were at 100 percent, revenue would also be zero (in a year or so), it is patently obvious that there is a point, at any point in time and, as Michael pointed out above, for any segment of the population, where the marginal tax rate will produce the maximum revenue.
What “evidence” would you accept as a demonstration of what you think people here are trying to prove (accepting, for the moment, that we are, in fact, trying to “prove” something to you)?
Would you accept, as evidence that the Bush tax cuts reduced revenue, the fact that, in inflation-adjusted dollars, the federal revenues have, on average over the last 10 years, fallen at about 1 percent per year? (This includes the period over which you claim the rose so astronomically, so that’s factored into the average.)
Or will you, hypocritically, pretend that this is not evidence? You’ll be in good company. The Heritage Foundation, AEI, and Cato have been working overtime (and getting paid for those overtime hours by the people whose incomes would be taxed if the cuts expired) to produce “analysis” papers that claim otherwise (the usual barrage of crap from economists who can’t even agree which direction is up).
Whatever.
“You need to look at revenue as a percent of GDP over the last 50 years. Regardless of tax rates, revenue has been between 15 and 20 percent of GDP, therefore it should be about 20%.”
GROG just proposed one of the largest tax increases, if not THE largest, with that statement.
Grog,
I never insulted your intelligence.
Every time I have politely asked for details about your comments I have been ignored. So I pointed out that you seem to me uninterested in discourse.
Or can you tell me what you mean by constitutionally limited government?
Looked at the recently ended Federal FY 2010. Revenue was just under 15%.
Since GROG believes the revenue number should be at 20% of GDP, it appears that he is calling for an INCREASE in taxes, across the board, of THIRTY-THREE PERCENT to be able to reach the 20% of GDP level!
Oh MY!
GROG,
Wait no longer.
Regression analysis with input of effective income tax rate for the top 5% of income earners in the US, and output of inflation-adjusted, per-capita income tax revenue, since 1979:
R²=0.31
P-Value=0.0023
Coefficient=40,000 (95% confidence range 16,000-65,000)
The meaning: Changes in the income tax rate on the top 5% of earners alone accounted for 31% of the variation in US federal income tax revenue collected since 1979. The most likely impact is that an increase in the effective income tax rate for the top 5% of earners of 1% results in an increase of revenues of $400 per person (counting all people, not just the top 5%).
To put it another way, increasing the effective rate on that one segment by a mere 1%, and leaving everyone else unchanged, would result in about $140,000,000,000 of increased revenue per year. And, of course, a mere 1% decrease on that group would result in about $140B of decreased revenue per year.
Off to my new job.
“Off to my new job.”
Our sympathies are with you and condolences to your family.
Paul Ryan is booed at his own town hall for not opposing tax cuts for the wealthy.
And these are Republican voters!
I wonder how seriously the Republican House members are panicking over their disastrous (and truly baffling) vote in support of the Ryan budget plan this week?
That scent wafting across the Hill is not cherry blossoms… it’s flop sweat! 🙂 The furious back-pedalling and weasel-words are going to be fun to watch.
Michael,
GROG’s question included “or that higher tax rates lead to higher revenues and lower deficits.”
His use of the conjunctive “and lower deficits” seriously befuddles the issue as the two conditions, higher revenues AND lower deficits” are mutually exclusive, given the budgetary process. Only where there are constraints on the budget process that would limit spending to less than the increased revenue for a given year, could “lower deficits” be conjoined. Separate issues.
One cannot gain weight (deficit) regardless of increasing calorie intake (revenue), if one increases exercise, and thus calories burned (spending), over the previous status quo.
Michael,
I’m much more interested in seeing your analysis rather than your conclusions.
For example, how do you deal with the effect tax rates have on economomic activity?
This should all be readily available.
Also, I would like to check your statisics considering some false statements you’ve already made regarding the Kennedy tax cuts.
MW said: But there were no tax cuts in 1960, 1961, 1962, or 1963.
Yes there were. He cut taxes for businesses in 1962 and enacted a 7% investment tax credit that year.
Does your analysis consider the 3 recessions in the 1950’s amid marginal tax rates in the 90% range? And the annual average growth rates in the 60’s compared to the 50’s?
Oh that’s right. You started your analysis in 1979.
GROG,
If I may:
I gave the federal revenue for 1950 and 1960 earlier. Revenue grew 230 per cent, from $43B to $99B during that span. Better by TWICE than any of the periods that YOU specified earlier. And at a time the top marginal rates were 92% and corporations paid a third of total income taxes. I know you like to ignore that which does not conform to your cherry picking, but come ON now!
Them wuz some REAL BAD recessions in the 50’s, weren’t they?
Oh, yeah, and we started the Interstate Highways, the Space Program, increased funding for education AND fought the Korean War, all the while reducing the per cent of the debt as to GDP from 88% down to 54%.
So you want to raise taxes by ONE-THIRD to get revenue from 15% of GDP in FY 2010 up to your number of 20%? Please, I kindly ask, would you tell us just how and where those taxes will be applied?
Thank you.
I know you like to ignore that which does not conform to your cherry picking, but come ON now!
Really Max? Seriously?
Intereresting how you cherry picked an 11 year period from 1950-1960. I wonder why you chose those 11 years?
Maybe it’s because if you had not used the 2 endpoints, 1950 and 1960, revenues only increased by 53% (5.9% per year) and only by 10% in 2005 dollars.
So you want to raise taxes by ONE-THIRD to get revenue from 15% of GDP in FY 2010 up to your number of 20%?
No. We have little control over revenue as % of GDP. We were talking about tax rates.
Yes you were GROG. And here is your entire post:
GROG says:
April 20, 2011 at 19:21
No shortchain. If income tax rates were zero percent, there would be zero income tax revenue.
You need to look at revenue as a percent of GDP over the last 50 years. Regardless of tax rates, revenue has been between 15 and 20 percent of GDP, therefore it should be about 20%.
(I put in BOLD your precise statement that revenue should be 20% of GDP)
Since revenue in FY 2010 was 15% of GDP, then to raise 1/3 MORE revenue, all else equal, you will increase all taxes by 1/3 from whatever the rates currently were. Simple.
Sorry, dude. Please don’t transfer your antics over to me. I choose those dates to match the first full decade after WWII during which marginal rates and corporate contributions were extremely high. No starting and stopping in the middle. Just one entire decade.
Just as I have done comparing 30 year periods, 1950-1980 and 1980-2010, to compare tax policy and jobs and wages and deficits and match them to pre- and post-supply side GOP policy. Which policy also fails to meet the earlier time period. Widely spaced data start and end points. No cherry-picking. Just playing the cards that were dealt. It could have been anything.
Michael has proven your fallacy with REAL analysis.
Take it up with him!
I haven’t even been following this argument, but I think GROG wins.. just because he’s been single-handedly fighting off the entire opposing army two whole days, and he’s still standing.
GROG… you’re just awesome 🙂
I replied directly to this question from shortchain:
If it is not true that higher tax rates will provide higher revenues at some point, then we should simply cut taxes to zero, right?
I was clearly referring to tax rates.
I choose those dates to match the first full decade after WWII during which marginal rates and corporate contributions were extremely high. No starting and stopping in the middle. Just one entire decade.
Did you realize a decade is 10 years, not 11 years?
Michael has proven your fallacy with REAL analysis.
Michael has proven nothing and has shown no analysis.
@fili,
I figured I’d make one last stand.
You’re awesome, too.
GROG,
Regressions pull out external impacts. If you’re asking about the effects in later years, I can run that analysis too. I was addressing the specific question about the connection between the income tax rate and income tax revenues.
I should have been clearer. I was referring to income taxes.
This is because effective income tax rates by quintile is unavailable (at least to me thus far) for years prior to 1979. I found through earlier regression analyses that the particular quintiles affected by changes in the tax rates matter tremendously. Do you know where I can get effective income tax rates for years prior to 1979? I’d love to add them to my analysis.
GROG,
I used the same source data that I used for “Take 2”, but I changed the dependent variable to tax revenues. It’s easy for you to reproduce it with a copy of Excel. Knock yourself out.
This seems quite apropos… and from a really hardcore rightie, too.
“Tax cuts do not increase revenue, and Republicans should stop saying otherwise.”
Also:
"In taxation, as in everything else, there is no free lunch."
(Sorry GROG :-))
Grog, I’ll echo filistro’s sentiment. You’ve defended your position doggedly against many voices. I’ll leave them all in your capable hands.
“You need to look at revenue as a percent of GDP over the last 50 years. Regardless of tax rates, REVENUE has been between 15 and 20 percent of GDP, therefore it should be about 20%.
Look at the the pronoun “it”. Singular. “Revenue”. Singular.
“Tax rates”. Plural.
“Regardless of tax rates . . . “. Context. ” . . . it should be about 20%”. Context.
If you were maintaining that you were referring to “tax rates” as 20%, you would also have mentioned the general tax rates over the time period nd would have used the plural pronoun.
“I replied directly to this question from shortchain:
“If it is not true that higher tax rates will provide higher revenues at some point, then we should simply cut taxes to zero, right?”
I was clearly referring to tax rates.”
No, not so clearly. Actually, you had answered sc in the previous paragraph in that comment:
“GROG says:
April 20, 2011 at 19:21
No shortchain. If income tax rates were zero percent, there would be zero income tax revenue.
You need to look at revenue as a percent of GDP over the last 50 years. Regardless of tax rates, revenue has been between 15 and 20 percent of GDP, therefore it should be about 20%.”
Sorry GROG. You’re trying for a do over to CYA. I ain’t buying it.
Anyway, I’ll leave you to Michael’s tender mercies. He’s thumping your noggin sumpin’ fierce. You either can’t, or refuse, to see it. I admire your tenacity, but sometimes it’s best, and more honest, to simply say “I’m wrong.”
Max,
You’re hung up on my use of a pronoun (on a topic that has nothing to do with anyone’s point) but you still think there’s 11 years in a decade? You never cease to amaze me. (I don’t know why I’m even responding to this idiocy.)
Anyway, I’ll leave you to Michael’s tender mercies. He’s thumping your noggin sumpin’ fierce. You either can’t, or refuse, to see it.
Since Micheal is “thumping my noggin sumpin’ firee”, why don’t you explain to me, in you own words, how Michael has thumped me sumpin’ fierce? Don’t just be a Michael lackey. Give a quick summary of his anaylsis and how that analysis resulted in his conclusions which “proves” that lower tax rates lead to lower revenues and higher deficits, and that higher taxes lead to more revenue and lower deficits.
I’m interested in hearing you explain it in your own words.
Thanks.
In my own words:
Go back and read Michael’s comment @ 0756 yesterday. Demonstrate, using statistical analysis such as regression, or ANOVA possibly, why your data is more valid than his. I am not going to teach you statistics.
Raw numbers and cherrypicked data can “prove” almost anything. But only when tested using generally approved statistical procedures, does it have a semblance of truth.
OK, I used easy numbers, ending in zero, for convenience. Since you have such an issue with the numbers and cannot digest the lesson itself, I shall modify and use STRICTLY years with the 3rd digit a “5”. I doubt, based on your previously demonstrated persistence in only believing what you WANT TO BELIEVE instead of demonstrated, statistically valid data, that it will do any good. So,
Federal Revenue 1950 = $43 Billion
Federal Revenue 1959 = $86 Billion
That’s STILL an INCREASE of TWO HUNDRED PERCENT!. That is STILL more than TWICE the growth of any period that you picked.
AND,
We STILL reduced the National Debt from 88% of GDP to 54% of GDP, while starting the Interstate Highway system, the Space Program, major aid to education including the GI Bill and fought the Korean War. All with 90+% marginal tax rates AND corporations paying 1/3 of all income taxes vs 6% these days.
Happy now?
The lesson, which you just DON’T seem to get, is that there was STILL tremendous revenue growth in spite of SIGNIFICANTLY HIGHER marginal top rates and corporate tax payments. All the while, the tax cuts of the Reagan/Bush years have SIGNIFICANTLY LESS to show for it and an exploding National Debt!
My last words on the subject.
Federal Revenue 1950 = $43 Billion
Federal Revenue 1959 = $86 Billion
That’s STILL an INCREASE of TWO HUNDRED PERCENT!. That is STILL more than TWICE the growth of any period that you picked.
No Max. That’s not an increase of TWO HUNDRED PERCENT.
You don’t know how long a decade is and you cannot do simple mathematics, much less put together a logical argument on tax rates and tax revenues.
There have been so many factual mistakes made on this thread the last 3 days. It’s a waste of time having conversations with people who can’t get facts correct and cannot do third grade math.
GROG,
You got any source data for quintile-based effective income tax rates prior to 1979? Let’s run them through the same analysis and see what comes up, shall we?
My mistake, GROG. (See, I’m not afraid to admit when I do!) And thank you for pointing it out.
ONE HUNDRED PERCENT increase! A doubling in ten years. All the other inherent facts presented are correct. Of course, you are welcome to fact check.
Feel better now?
I note you have not commented on the “lesson” being presented once the presentation error is corrected.
BTW, Max, that error is really, really common. Shows up in advertising all the time. My favorite is when I hear things like “200% fewer calories than the regular…” As if whatever it was could possibly suck calories right out of you.
And then people mess up the case where if you increase something by 50%, and then want to decrease it to get back to the original number, you cut by 33%, not 50% (cutting by 50% leaves you with 75% of the original). Ain’t percentages grand?
MW,
And a really lax mistake on my part, having dealt with mark-up and discounts for years!
Good thing GROG was on the ball to locate errors like that.
ONE HUNDRED PERCENT increase! A doubling in ten years.
So what?
You know what happened to revenues between 1960 and 1969?
Wait for it……….
ONE HUNDRED PERCENT increase! A doubling in ten years.
Oh, and by the way, we went from a surplus of $300 million to a surplus of $3.3 billion over those ten years.
You know happened to our deficit between 1950 and 1959?
It increased from $3.1 billion to $12.8 billion.
OK GROG,
Fun with numbers:
28 year periods (7 presidential terms) with 90+% and 70% top marginal tax rates, 1952-1980,
Revenue ($)
1950 = $71.8 B
1980 = $ 517.1 B
Growth = 7.2X
National Debt (% GDP)
1952 = 72.3%
1980 = 32.6%
Reduction = 39.7 % points
28 year period (7 presidential terms) with less than 40% top marginal tax rates, (Reagan/Bush cuts), 1981-2009,
Revenue ($)</b<
1981 = $599.3 B
2008 = $2524 B
Growth = 4.2X 42% LOWER growth rate than previous 7 prez terms
National Dept (%GDP)
1981 = 32.6%
2008 = 69.15%
INCREASE = 36.55 % points
Slice it and dice it, BUT, during same corresponding and most recent time periods (7 presidential terms):
Revenue INCREASED faster under the old, higher marginal rates than with Reagan?Bush tax cuts.
National Debt as percent of GDP DECREASED under the old, higher marginal rates.
National Debt as percent of GDP INCREASED with the Reagan/Bush tax cuts.
Tag! You’re it!
GROG,
Admit it. The numbers DO NOT justify the “tax cuts solve everything” mantra of the supply-sider GOP. They are just too damned obvious. Long time periods, each inclusive of the two different taxation policies just don’t demonstrate the viability of the tax policy. The supply-side experiment is a failure.
BUT, you, nor your supply-side brethren, will admit it. Even though Reagan’s economic guy, David Stockman, has actually done so.
This won’t change your mind. Of that I am certain. Enjoy your Grand Illusion.
For myself, I’m going with the evidence.
Max,
Why are you showing debt as a percentage of GDP, but not revenue as a percentage of GDP?
The following is revenue as a percentage of GDP from 1950 to 2008.
1950 – 14.4
16.1
19.0
18.7
18.5
16.5
17.5
17.7
17.3
16.2
17.8
17.8
17.6
17.8
17.6
17.0
17.3
18.4
17.6
19.7
19.0
17.3
17.6
17.6
18.3
17.9
17.1
17.7
18.0
18.0
18.5
19.0
19.6
19.2
17.5
17.3
17.7
17.5
18.4
18.2
18.4
18.0
17.8
17.5
17.5
18.0
18.4
18.8
19.2
19.9
19.8
20.6
19.5
17.6
16.2
16.1
17.3
18.2
18.5
2008 – 17.5
I’ll ask the question again. How have lower rates lead to lower revenue and higher deficits, and how have higher tax rates lead to higher revenue and lower deficits?
There is no historical correlation between tax rates and revenue as a percentage of GDP since 1950. Unless revenue as a % of GDP has nothing to do with debt as a % of GDP, you simply cannot blame tax rates on today’s deficits, which was my point from the beginning.
As I said, GROG, you’ll never admit the obvious.
“There is no historical correlation between tax rates and revenue as a percentage of GDP since 1950” So, by your own admission, tax cuts DO NOT increase revenue.
You said it, even though you won’t admit it.
And I, nor any others debating you here, have said that revenue alone causes deficits. ALWAYS a combination. So when you correct the problem, it also takes a combination.
Have a nice day.
Poor Max. When you’re in a hole, stop digging.
So, by your own admission, tax cuts DO NOT increase revenue.
Wrong again. Revenue has increased over the past 60 years, regardless of tax rates, at the same rate GDP has increased over the past 60 years. The same cannot be said of debt.
Today’s deficits have nothing to do with tax rates and everything to do with spending.
Facts can be stubborn things, Max. But you’ll never admit the obvious.