Originally posted by SDW2001
As for tax cuts, you're just utterly wrong. Tax cuts stimluate economic growth, which in turn brings in more revenue.
What you've said above is far from utterly
right. This is another good spot to recommend the book The Price of Loyalty
-- there's some good discussion there from Paul O'Neill and Alan Greenspan there about practical economics vs. ideological economics.
What you've stated above about tax cuts is a nuance-free, situation-free, fact-free ideological proclamation -- it's not a valid real-word fact, as much as you'd like to treat it as such.
You might be correct that tax cuts will generally stimulate the economy, although a lot depends of the composition of those tax cuts. The stimulative effect could be very small, and even negated or reversed by other effects of cutting taxes, like rising deficits or unemployment of former government workers (if that's a place where cuts were made along with cutting taxes).
It's far, far
from certain that the degree of economic stimulus generated by a tax cut will be so great that revenues are actually going to go up when tax rates go down.
Time to trot out the old Laffer curve:
From http://www.investopedia.com/terms/l/laffercurve.asp:The curve suggests that, as taxes increase from low levels, tax revenue collected by the government also increases. It also shows that tax rates increasing after a certain point (T*) would cause people not to work as hard or not at all, thereby reducing tax revenue. Eventually, if tax rates reached 100% (the far right of the curve), then all people would choose not to work because everything they earned would go to the government.
Governments would like to be at point T*, because it is the point at which the government collects maximum amount of tax revenue while people continue to work hard.
The completely unfounded Article of Faith for a lot of conservatives is that, no matter where taxes are a the moment, that we're somewhere to the right of T*, not on the left.
One must also realize that the curve is a gross over simplification, it might have multiple maxima, and it doesn't take into a count complicated things about tax structure.
One good fiscally conservative point to make -- although not very meaningful unless you really know where T* is -- is that if government can make do with less revenue than T* represents, then it's certainly not mandatory to push tax rates until revenue is maximized.