Tax Facts in a Nutshell

We can debate with the left about economics until we’re blue in the face. We can show them Laffer Curves and explain how supply side economics harnesses basic human nature via incentives. Many of us have tried.

Here’s an easier way:

Simply show them today’s column by Alan Reynolds in the Wall Street Journal (LINK).

Or simply show them this graphic:

Why have immoral, confiscatory tax rates when we can keep them low and boost growth and lower unemployment?

Some people are just stuck on stupid.

Published in: on June 16, 2011 at 4:19 pm  Leave a Comment  
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Stop Calling Them “Tax Cuts”

The GOP has bungled this situation for 10 years and running. This is about tax RATES and how high is too high. It appears that the GOP is not much better informed on economics than the Democrats. They got suckered into lowering tax rates back in the early Bush years with sunset provisions and now we have to vote for passage again with a hostile congress and a stubborn president without an economic clue.

This is one of the top reasons Michael Steele should be forced out. The GOP has a golden opportunity here to frame the debate in it’s proper terms: Optimal rates and the Laffer curve. The Democrats would have you believe that “tax cuts” are no different than welfare checks and are simply handed to wealthy folks that don’t need them. This is not about how the government spends money this is about where the government gets the money in the first place. Taxing top earners at punitive rates sucks the life blood out of the economy. The GOP has a chance to prove once and for all that the Laffer curve is not a “supply-side” theory, it is an economic truth.

They need to prepare now. Take the house in 2010 and the senate with a new President in 2012. Then gradually lower rates while holding the line on spending and watch the deficits turn to surpluses and showcase the results. The revenue gains from the Reagan and Bush tax reductions were obscured by spending increases. This is the time to take control and regain the title of fiscal responsibility.

Robert Tracinski of the Intellectual Activist reminds us of the toxic policies of the FDR era  in his latest missive, “And let me add that the Republicans of today are (with a few notable exceptions) more radical than the Republicans of 1946, back in the era when “me-too” was the official policy of the right. And that’s not to underestimate the achievement of the post-war Republicans, who did a lot to dismantle FDR’s sweeping wartime economic controls—which is what actually ended the Great Depression and ushered in the prosperity of the 1950s.

You can sign up for a free trial here: LINK

This is a battle of ideas. The GOP needs to prove they have a better idea and this is the way to do it.

Pat Duggan

Key Policy Commentary

The oil spill dominates the news and will continue to. We can’t vote it away. It is too late to prepare for it. I will join those who acknowledge the failures of BP AND Government here and push for policies that reduce the chances of future catastrophes. I would summarize that policy this way:

We are decades away, minimum, from an oil-free world and for national security reasons we cannot rely on unfriendly nations to supply us. We need to increase domestic drilling on-shore and off-shore while backing away from the deep water drilling that has caused this problem.

While this plays out we can’t afford to lose sight of the two key issues where we can have a direct immediate impact: the economy and foreign affairs.

For some economic perspective check out Art Laffer in the Wall Street Journal who notes that coming tax policy can sink us into a “double dip” recession in 2011. LINK

Arthur Brooks draws interesting comparisons to Greece here: LINK

Note: Arthur Brooks will be in Chicago in two weeks for a speech and book signing. Those interested in attending a great event should contact me directly. If you do not have my email please access the “leave a comment” feature directly below.

Fred Barnes has great insight into the ways of Washington but he falls into a familiar trap here. Those expecting Obama to “pivot to the right” or any of the many maneuvers of Bill Clinton are not getting it. Obama is not Bill Clinton. Clinton liked playing politics and understood the dynamics of compromise and how it could preserve power. Obama views all of that as just part of the problem. He does not like America or its political structure. He wants to “change” it. Read Fred here: LINK

Blogger “Neoneocon” has some comments on the pivot here: LINK

Pat Duggan

Illinois is Doomed Unless…

“No”

“Non-vote”

That’s how Democrat state reps Keith Farnham and Jack Franks “voted” on the forensic audit resolution they sponsored. In spite of their supercilious backing of the resolution, Farnham voted against it and Franks “went to the bathroom”.

Read the full story here: LINK

Illinois is in deep financial trouble. Michigan and California are also. Democratic politicians refuse to acknowledge that raising taxes simply is not an option. Businesses are fleeing for other states. Overall populations are shrinking in some cases.

For a refreshing alternative look at what Chris Christie is accomplishing in New Jersey. The media and union members are apoplectic that he is not dancing to their tune.

Read the full story here: LINK

Published in: on May 27, 2010 at 2:25 pm  Comments (1)  
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Back to the Debate

Now that the latest batch of elections are over, delivering knockout blows to incumbents, we return to the debate. What will be the main topic? Until Israel tires of our ongoing appeasement of Iran’s nuclear weapons program and takes action, the economy remains the focus. We’ll continue to watch the troubles in Greece, the other “PIIGS”, the Euro and the implications for America-and they are significant.

Some recent columns dovetail perfectly on the budget issues. I will demonstrate. There’s got to be a reason to spend time on this blog, right? 😉

During the 2008 elections, and seemingly ever since, the left has insisted they offer the alternative to the “failed policies of George Bush”. I’ve asked many of the Bush bashers what specifically they mean. (Like many free-market, fiscal conservatives, I have my own issues with GW). The common reply: “Tax cuts for the rich.” This is laughable. I assume they are referring to the deficit. That theory is debunked here:

In this column Brian Riedl refers to tax revenue as a percent of the economy (referring to GDP) and how it always tops out short of the 20% mark. David Ranson covered this very topic one day earlier in the Wall Street Journal:

This is yet another real life graphic representation of the “Laffer Curve”. I’ve posted some links to explain the Laffer theory here:

The “Readers Digest” version here:

A deeper explanation here:

A full video series for those deeply interested here:

Economist Art Laffer was not the first to point out how the laws of economics apply here, and he doesn’t claim to be. All you need to do is ask yourself this question: If the government announced they were going to seize 100% of your paycheck would you go to work tomorrow? How about 90%? 70%?

You get the idea. Higher tax rates do not necessarily deliver higher revenue. This is a far cry from “tax cuts always pay for themselves”. Add this to the list of other things supply siders do not claim but that big government liberals say they do. Like “trickle-down economics” these are deceptions and straw men constructed by the left to avoid real debate.

For those who argue that Soviet Russia basically took 100% and people still went to work I will remind them that in Russia they had no choice. For now we do. This would more accurately be described as a form of slavery, something Walter Williams dares to assert here.

The bottom line is that there is only so much tax revenue the government can suck out of the private sector. All this talk of “corporate greed” and “obscene profits” ignores the fact that without our profitable businesses the government does not have a dime for social programs or entitlements. There is nothing to redistribute. Private industry is the golden goose. It is the lifeblood of our economy and if we try to draw too much we will kill it.

If we can’t raise more revenue-and layering tax upon tax will not yield more revenue-we must cut spending. Our current Congress lacks the courage and common sense necessary. New leadership is essential. Let’s hope the next Congress takes their job, and their oath of office seriously.

Pat Duggan

Published in: on May 19, 2010 at 10:16 pm  Leave a Comment  
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