2005 US income tax revenues may be highest ever

[Pangloss]

In another thread Bascule made the interesting (and as I later determined by visiting the Congressional Budget Office, *correct*) point that income revenues have been lower under the Bush administration in spite of the Bush tax cut.

 

Apparently there's been a bit of a turnaround. I guess the general idea (whether true or not) is that you cut taxes, wait for the change to percolate, and then look for a result. But of course that's a Republican ideal, and the real picture is obviously going to be far more complex than that. Still, it seems that Republicans will have something to cheer about this fall.

 

http://www.kansascity.com/mld/kansascity/business/12758013.htm

 

If revenue growth is near the nearly 15 percent anticipated, it will be the largest yearly increase ever after accounting for the effect of inflation. It’s not an unrealistic expectation, either. For the first 11 months of this fiscal year, receipts were up 13.7 percent, to $1.9 trillion. The only thing that could prevent an inflation-adjusted record in terms of receipts is a temporary economic slowdown in the wake of Hurricanes Katrina and Rita.

 

But of course the real story here SHOULD be the fact that we haven't done anything about SPENDING. It makes no sense at all that we'll be collecting the largest amount of income tax money we've ever collected (assuming that turns out to be the case) and still show a deficit in the budget!

 

In my opinion Democrats and Republicans are both accountable for this problem, but Republicans in particular are going to have to bear the brunt of the blame for any increase in the deficit this year. They control both houses of congress and the presidency. The buck stops here, as they say.

[bascule]

In another thread Bascule made the interesting (and as I later determined by visiting the Congressional Budget Office, *correct*) point that income revenues have been lower under the Bush administration in spite of the Bush tax cut.

 

Thanks for conceeding my point.

 

Apparently there's been a bit of a turnaround.

 

Cool

 

I guess the general idea (whether true or not) is that you cut taxes, wait for the change to percolate, and then look for a result. But of course that's a Republican ideal, and the real picture is obviously going to be far more complex than that.

 

Folks, I give you the Republican ideal, the Laffer Curve:

 

 

...compared to the more realistic neo-Laffer Curve:

 

 

(relax, it's a joke, but the point is that the Laffer Curve is a gross oversimplification)

 

In my opinion Democrats and Republicans are both accountable for this problem

 

The President has enormous power to influence how the budget is managed. The executive branch writes it, Congress augments it, then sends it back to the President for approval. The President can leverage great control over unnecessary or otherwise bad spending decisions on the part of Congress by exercising his veto power.

 

Correct me if I'm wrong, but I believe Bush remains the only President in US history who has never vetoed a single bill.

 

So yes, the Democrats and Republicans are both responsible, but the President simply isn't doing his job in terms of preventing runaway spending. If Bush had just once gone "Nope, not gonna sign that spending bill because we don't have the money" my opinion would be different... but as far as I've read the only bills Bush has even considered vetoing have been on moral grounds, not economic.

[Pangloss]

Hehe, cute. Can I be a neo-lafferian? We will hold our meetings on Lost island. (grin)

 

Yeah I think we're still waiting for Bush's first veto. It's something that both sides have used in various political arguments, but at the very least it underscores the fact that Republicans clearly control the federal government.

[Douglas]

The President can leverage great control over unnecessary or otherwise bad spending decisions on the part of Congress by exercising his veto power.

The last I checked, the Prez doesn't have a line item veto.

 

Anyway, Bush is spending too much. Fortunately, as the "incurable optimist" pointed out, revenues are up in spite of the the tax cut...........it must piss off the lefties.

[bascule]

The last I checked, the Prez doesn't have a line item veto.

 

Red herring? Why does he need one? And even so, a line item veto is a dangerous tool because it would allow the President to circumvent compromises made in Congress to get a bill to pass. The parts the President wants would go straight into law and the ones he doesn't would be rejected. That's waaay too much power...

 

I don't know why you decided to pull that red herring out of your ass, but obviously what I was saying was if spending in a bill is fiscally irresponsible it should be vetoed and sent back to Congress with a "Send this back to me when you've cut $100 billion out of the spending" or so forth. It's the executive's role to manage the budget. They write it, they approve it, and they spend it...

[Pangloss]

Actually that ship's already sailed (and sunk). Clinton was given the line-item veto, but it was struck down by the Supreme Court.

 

(Interestingly, the power was given to him by the newly-Republican congress, as part of the "Contract with America" deal from Newt & Co.)

[swansont]

Any idea how much of the expected revenue is from the "tax holiday" on repatriated foreign profits of US corporations?

[Pangloss]

I sure don't, and it's an interesting question. If you find something more on it please pass it along.

[Douglas]

Red herring? ...

I don't see it as a red herring.

[bascule]

I don't see it as a red herring.

 

A line item veto is simply irrelevant

[Mayflower]

Considering inflation and a rising population, I would find it odd that for any given year the tax revenue to be less than the previous.

[Pangloss]

Yah, you would think that, but it turns out that tax revenue waxes and wanes in a fairly (but not entirely) predictable manner.

[bascule]

Considering inflation and a rising population, I would find it odd that for any given year the tax revenue to be less than the previous.

 

Except tax revenue is dependent upon how well each person and business is doing financially, and that fluxuates. When you combine the dot com bubble with 9/11, it makes for a pretty dire financial situation.