murky has no clue. neither do the dems when it come to economics. clueless does not describe their ignorance.
On Nov 17, 4:02 pm, Gaar <[EMAIL PROTECTED]> wrote: > http://taxesandgrowth.ncpa.org/news/do-taxes-affect-economic-growth > > Beyond a certain point, however, when taxes begin being used as > transfer payments, incentives to work, save and invest are reduced, > which affects the nation's economic progress. High marginal tax rates > cause people to work fewer hours, take longer vacations, and shelter > their income to evade tax collection. High taxes encourage individuals > to divert resources from their most productive uses to those uses > which will lower their tax burden. > > In any economy, there is an optimal tax rate (the percentage of GDP > that comes from taxes) which will ensure maximum economic growth; if > the tax burden exceeds that level, economic growth will slow. > > A study that examined data from 1950 to 1995 found that:1 > > -The estimated growth-maximizing tax rate for the U.S. during that > time period was 21 percent of GDP. > -The corresponding rate of economic growth would be 4.6 percent. > -In reality, taxes were 24.2 percent of GDP in 1950 and rose > thereafter; the actual economic growth rate during that period was 3.4 > percent. > -Actual GDP in 1995 (measured in 1992 dollars) was $6.67 trillion, but > if the optimal tax rate had been effect, GDP would have been $13.48 > billion. > -Under the optimal tax rate, workers would have been producing > $107,900 in per capita output in 1995, much more than the actual > figure of $54,100. > > Historic Tax Cuts: JFK and Reagan > The 1960s and 1980s were periods of record sustained high growth, > mainly due to the tax cuts and reforms enacted at the beginning of > each decade by Kennedy and Reagan, respectively. > > The JFK administration, against the advice of many economic advisers, > began cutting taxes in 1962, starting with businesses. An investment > tax credit encouraged investment and changes in depreciation costs > lowered the cost of capital for businesses. The top corporate rate > fell from 52 to 48 percent, and the top individual marginal tax rate > fell from 90 to 70 percent. The empirical evidence shows that these > tax cuts stimulated growth:2 > > Between 1962 and 1969, investment grew at an annual rate of 6.1 > percent, far higher than the 3 percent annual rate for 1959-1962 and > the 2.3 percent rate for 1969-1972, after the JFK tax reforms had been > repealed. > Real GNP grew 4.5 percent during the 1960s, higher than the 2.4 > percent growth rate seen from 1952-1960. > The JFK tax cuts also provided proof of a counter-intuitive idea, that > cutting taxes will not raise deficits:3 > > From 1962-1969, government revenue increased 6.4 percent a year, > compared with 1.2 percent a year between 1952-1959. > Indeed, after the '62 and '64 tax cuts, the deficit actually fell from > $7.1 billion to $1.4 billion. > The 1980s was another decade marked by sustained economic growth, > which was especially remarkable given the stagflation that was > strangling the economy by the end of President Carter's term. From the > trough of the recession in 1982 to the peak in 1990, it was the > longest peacetime expansion in history. > > Reagan's tax cuts spurred an investment boom, just like in the 1960s > after the JFK tax cuts. The Economic Recovery Tax Act of 1981 featured > a 25 percent across-the-board tax cut. The tax reforms increased > incentives to save, work and invest, which increased the productive > output of the economy to match the increase in demand:4 > > Real economic growth averaged 3.2 percent during the Reagan years, > compared with 2.8 percent during the Fort-Carter years and 2.1 percent > during the Bush-Clinton years. > Real median family income grew by $4,000 during the Reagan period > after experiencing no growth in the pre-Reagan years; it experienced a > loss of almost $1,500 in the post-Reagan years. > The amount of time the median worker stayed unemployed fell > drastically. > The first law of government policy should be "first do no harm." The > government should encourage long-term economic growth through low > taxes, stable currency, and enforcing contracts. High taxes drain > resources that would be most productive in the private sector. The > experiences of the JFK and Reagan tax cuts show that a hands-off > fiscal policy works best to stimulate economic growth. > > On Nov 17, 3:17 am, "mike [move on] 532" <[EMAIL PROTECTED]> > wrote: > > > Why the Economy Grows Like Crazy Amid High > > Taxeshttp://www.alternet.org/workplace/106979/ > > The raw truth is that the economy has grown faster when taxes were > > higher, but how can we explain that phenomenon? The real- > > world effects of tax policy are counterintuitive. > > > They run exactly opposite the conventional wisdom. They defy what the > > Heritage Foundation calls common sense and what the American > > Enterprise Institute calls logic. > > > Reality laughs at the Laffer curve, calls Ronald Reagan wrong and > > says > > George W. Bush is a loon. > > > High marginal tax rates correlate with economic growth. > > > Examples include World War II and the Truman-Eisenhower years, when > > it > > was around 90 percent, and the Clinton years, when it was high > > relative to the preceding and following administrations. > > > Tax rate increases are followed by real economic growth. > > > Examples include Hoover in 1932, Roosevelt in 1936 and 1940, Bush the > > Elder in 1991 and Clinton in1993. > > > Moderate tax cuts are followed by a flat economy. > > > This is a generalization from one example: Johnson in 1964. > > > Large tax cuts are followed by a boom, a bubble and a crash. > > > 1929, 1987 and 2008 are examples. > > > These are covered in more detail in the first part of the article > > "Tax > > Cuts: The B.S. and the Facts." > > > Why do high taxes create a stronger economy? > > > I used to run a small business -- a commercial film production > > company. > > > Every time we took a dollar out as personal income, it instantly > > turned into 50 cents. > > > If we didn't really need the money, that was an incentive to keep it > > in the company and to find ways to spend it that took it out of the > > taxable profit column but increased the value of the company. > > > High taxes create an incentive to reinvest profits into long-term > > growth. > > > With high taxes, the only way to retain the bulk of the wealth > > created > > by a business is by reinvesting it in the business -- in plants, > > equipment, staff, research and development, new products and all the > > rest. > > > The higher taxes are (and from 1940 to 1964 the top rates were around > > 90 percent), the more this is true. > > > This creates a bias toward long-term planning. > > > If a business is planning for the long term, it wants a happy, stable > > work force. It becomes worthwhile to pay good wages and offer decent > > benefits. > > > Low taxes create an incentive for profit taking. > > > It is easy to confuse profitability with wealth creation. > > > They are not the same --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
