Cut tax is not the best way to solve economic problem

Republican always suggests cut tax, reduce market intervention to help the economic recovery. Theatrically let the market allocate resources is the best, however, under the situation nowadays, it may not true.

People will aim at higher revenue in normal situation. If the government cut tax, will they spend money and help recover the economy?

To individuals, even if the taxes being cut, they may not spend money if they think the future is pessimistic. The cost for spending is higher than what than the benefit. It cannot help the economy. Rich people may use money to invest oversea. It cannot help economic recovery. Actually, it is common for those people to invest oversea.

To businessman cut tax can reduce their cost, but it does not equal that they are willing to employ more people or increase investment. If they found employer can finish works, there are no reason for them to employ more people even the tax are cut. It cannot help to decrease the unemployment rate.

Cut tax is also a cost to country. It is an explicit expenditure to nation. In long term, the government income decrease, it increases the difficulties for them to repay those debts. Everyone care for our revenue, so it is a must for us to against the government to raise taxes at that time. Take a look at Greek. It may create other confident cries that time, such as the debts may slow down country economic cries. It is not suitable for a country with large amount of debts to cut tax.

In most of the situation, market is the most efficient way to allocate resources. However it is the situation that the resources should mainly focus on recover local economy, even they may not be most efficient. That?s why the government current policy and plans for build more role, having more government lead economic plan are most suitable. Republican suggestion is not the best way to help economic recovery.

The Laffer Curve

It worked (stimulated the economy and increased government revenues) under Presidents Kennedy, Reagan and Bush II (to a degree).

As Kennedy said, a rising tide lifts all boats. It was trivialized by the media under Reagan as trickle down economics, when the way things were before the tax cuts, especially under Carter, was actually trickle up poverty.

Can you imagine if what will happen if government did not save banks and and those car factory? If there are no economic saving plan by government? People do not get job or business, whats the use for cutting tax?
I didn't mean it is totally useless, but at this stage, it is not the best way.

From your link.

"2005 US Congressional Budget Office (CBO) estimates of the effectiveness of tax cuts

In 2005, the Congressional Budget Office released a paper called "Analyzing the Economic and Budgetary Effects of a 10 Percent Cut in Income Tax Rates". This paper considered the impact of a stylized reduction of 10% in the then existing marginal income tax rates in the US (for example, if those facing a 25% marginal income tax rate had it lowered to 22.5%). Unlike earlier research, the CBO paper estimates the budgetary impact of possible macroeconomic effects of tax policies, i.e., it attempts to account for how reductions in individual income tax rates might affect the overall future growth of the economy, and therefore influence future government tax revenues; and ultimately, impact deficits or surpluses. The paper's author forecasts the effects using various assumptions (e.g., people's foresight, the mobility of capital, and the ways in which the federal government might make up for a lower percentage revenue). In the paper's most generous estimated growth scenario, only 28% of the projected lower tax revenue would be recouped over a 10-year period after a 10% across-the-board reduction in all individual income tax rates. The paper points out that these projected shortfalls in revenue would have to be made up by federal borrowing: the paper estimates that the federal government would pay an extra $200 billion in interest over the decade covered by his analysis.[6]"

One of the main words used in this posted quote is "estimate". The positive history on government estimates is shaky to say the least.

Why then does the Tea Party use "estimates" from the CBO about the cost of the healthcare bill so often?

Is it just a case of good estimates are ones that people agree with and bad estimates are ones that people disagree with?

I didn't say the use of government estimates was good for any group or person to cite.

All this talk of cutting taxes as being the cure for the economic woes of the nation, as cited in the postings, above, will lead to conclusions like BoxerDC's.

The only way to 'cure' the economy is to combine a drastic reduction in government spending (this is where the deficit reduction is at!!!) with a reduction in taxes across the board -- or their outright abolishment, and bring in a flat tax, at a rate that cannot just be increased at the whim of Congress. Opponents to an extension of the tax cuts will cite it as being equivilent to increasing the deficit. Such an extension will only continue to limit the intake of funds from the people (limiting the government's income), but the criticism ignores the fact the government continues to increase the amount of spending that it does, no matter what it's income appears to be. That is the recklessness that must be opposed, if we are to be able to continue to hold our collective heads above water, recover and survive. To succumb to the idea that we need more tax revenue is to throw in with the rest of the irresponsible a*****es that seem to have usurped the government.

At present, the only half-way viable course of action seems to be to replace these Dems with Reps, but... as a people, we must hold them, the Reps, accountable too, as they have in the past, been just as guilty of driving up the deficit. If they continue on that path, they will, just a quickly as have the Democrats, make themselves irrelevant to the future of this country, and allow the wide-spread expansion of additional political parties, which will only force the complication of any political activism with the realities of coalitions, and only stagnate any real progress in the Houses of government.

Because they are so obviously padded. What would you expect with a Democrat President, and a Congress with a large Democrat population.




Absolutely on the money.

One point, cutting taxes now, effectively keeping taxes the same is essential, as you say, along with spending cuts. But we'll get the biggest immediate boost from knowing where the country's going, and that boost will be lead by housing.

But nothing will work if we don't get Obamacare repealed. That's the first and biggest necessary spending cut. It's so huge, complicated and in parts unworkable on the surface of it, we'll go under no matter what else we do. Thanks CBO, among others.