OT: Raising or lowering taxes--what effect on the economy?

What effect does raising taxes have on the economy, and why?

What effect does lowering taxes have on the economy, and why?

Reply to
Adam Corolla
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Up to a certain point, it's been shown by Kennedy, 20 years later by Reagan and 20 years later by Bush that lowering tax RATES raises tax REVENUES.

We need to lower rates again and see if we continue to get increased revenues. And again. And again. Until we find the "sweet spot"...also known as the Laffler Curve. Most liberals want the highest, most punitive tax rates they can inflict. And most conservatives want no taxes at all or even have the government pay them. The real truth is at the peak of the Laffler Curve. We need to find that.

Reply to
D.D. Pallmer

We need to keep Conservatives in power.

Did anyone comment on the gigantic deficit reduction?

Reply to
Scott in Florida

I calculate by the 08 president elections the deficit will be zero. The Republicans will remain in the WH and if they lose the house this election take it back in 08. Should be a fun time.

Reply to
dbu

Well, that is really one question because they are exact opposites. Assuming that lowering taxes would raise spending and spur the economy, raising taxes would dampen spending and sour the economy.

Answering one question answers the other by inferrance.

You and I (consumers) are collectively the largest part of the economy. If we have more money to spend, we will spend it -- or save it and that spurs investment. If we buy goods or services, then we create an environment where another person gets to work. the more of us that are working, the greater the tax base for the government, and the more revenue they rake in.

If 80% of us work at a 33% tax rate, the government sees X amount of revenue. but, if 95% of us work at a 28% tax rate, the revenue goes up, and this is good for government and for us. Lowering taxes on you and I allows us to buy more goods and services, which employs others that can then be taxed. Our taxes go down, but revenues go up. Pretty simple stuff really.

Does it really work that way? Good question. The Republicans think it does, the Democrats are not so sure. Hense the battle lines currently drawn over keeping the tax cuts or repealing them.

Reply to
Jeff Strickland

Again, what is the Dimwhit plan, raise taxes???

Reply to
Roadrunner Newsgroup

I suppose that depends on who "Dimwhit" (sic) is. GWB is/has lowering/lowered taxes ... It's the dimwit Democrats that are looking to raise them.

Reply to
Jeff Strickland

Republicans can't stop spending money so question is mute.

Reply to
Art

That point was reiterated by a senate democrat candidate this morning on Meet the Press. She said if she wins she will work to rase taxes.

Reply to
dbu

How many times must we tell you Bublicans that "deficits are taxes...." So said Nobel Prize-winning economist Milton Friedman.

Just use your noodle. You don't think the interest and principal on all those 10- and 30-year Treasury Bonds issued to cover the 400-plus billion dollar deficit gets paid by the Tooth Fairy, do ya? It gets paid with Tax Money.

You Bublicans are precious :-)

Reply to
Built_Well

Please review the budget deficit and get back to us....

It is NOT 400 Billion....

....and we are at war....

Reply to
Scott in Florida

Technically, most treasury bonds are paid by Mortgage Interest. But, I'm sure you knew that.

This means that home owners are paying them off through mortgage payments. Investors buy T-Bills because they are very steady (reliable) income.

30-year mortgage rates are determined by the price/yield of 10-year Treasury Bonds. As the bonds go up and down, mortgage interest rates also go up and down.

I accept that deficits are effectively a tax, but the difference is that the tas rate remains constant, while the term of the repayment goes up or down. I suppose you've heard in the past ten days that the deficit is going down, and will be halved earlier than expected/projected. This is despite the costs of waging war in Iraq and Afghanistan.

Reply to
Jeff Strickland

the lefties like to stretch the truth to their liking, LOL.

Reply to
dbu

You are confusing too much spending with optimizing tax revenues. One has absolutely nothing to do with the other. Yes, we spend too much. No, we have not yet optimized tax revenues by find the lowest rates that produce the greatest amount of revenue.

Reply to
D.D. Pallmer

I think you're confusing Fannie Maes, Freddy Macs, and Ginnie Maes with U.S. Treasury bills, notes, and bonds. GSEs issue the Fannies, Freddies, and GNMAs--not the U.S. Treasury. Agency bonds are totally different from Treasury bonds :-P

Reply to
Built_Well

LOL! What are we gonna do with you Bublicans [lol]

Reply to
Built_Well

I'm not confusing anything. Mortgage Interest Rates are set by the activity (pricing) of the 10-year Treasury Notes (bond) market. They sell bonds to finance Fannie Mae, et al.

Reply to
Jeff Strickland

=====

Oh, you're clever. I'm not disputing your statement that mortgage rates are "set" by the 10 year Treasury note and/or the long bond.

I'm disputing your wild statement that "Technically, most treasury bonds are paid by Mortgage Interest. But, I'm sure you knew that."

No, I did *NOT* know that!! Lol! You are mistaken, my good Bublican fellow :-P

Then, you add the following remark to clinch the deal: "This means that home owners are paying them off through mortgage payments."

By "them," you clearly mean Treasuries.

Buddy, home mortgage payments do not pay off Treasuries! Tax money pays off Treasuries. You oughta go work for the President. He can't even pronounce "peninsula" right! "PeninCHula" LOL. Doesn't anybody tell him nothin'? It's so embarrasing for the country.

You Bublicans are precious. LOL.

Reply to
Built_Well

Municipal bonds are paid off by local taxes, treasuries are not. The government sells treasury bonds all of the time, and our taxes do not change as a result. Municipal bonds are also sold by local governments, but these are repaid through taxation.

Reply to
Jeff Strickland

It tends to slow it down by removing demand.

It tends to speed it up by increasing demand.

Keep in mind the word "tends" because when there's lots of inflation, a tax may do nothing but add to the inflation, and that sometimes causes the government to borrow so much more money that private borrowers are squeezed out, so the economy could actually slow down. Similarly a tax hike could start a recession, or it might simply help cool off the economy and prevent inflation and therefore keep growth going.

Anybody who says that either tax hikes or cuts are like a free lunch are crazy. Everything has good and bad points to it.

Reply to
larry moe 'n curly

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