Quote Originally Posted by carl View Post
First things first.

Like I said, you will get farther with American audiences if you don't use the snooty European approach like the following.
You don't know what you don't know. My blog's reader stats shows that there are enough thick-skinned Americans who have not too much of a problem with my style.


Ceteris paribus...ok repair to the internet...all other things being equal...well why didn't you say so? That is just the point, all other things won't be equal. Human nature decrees that all other things won't be equal.
You don't seem to have understood the meaning of ceteris paribus. It means you change one thing, and but one thing. Everything may change as a result, there's no problem with that.
Ceteris paribus is a necessary guideline for discussing the effect of one action. It's requires for clarity of thought and arguments in such a case.

No, income + tax rate does not equal revenues. 5 + 5% doesn't equal anything. It doesn't make any sense.
And the only one who places a "+" between both here is you.
Tax base * tax rate - deductions + (black box for other complicated exceptions) = revenue
or simplified,
Tax base * tax rate = revenue
Halved tax rate requires more than doubled tax base (income) to generate increased revenues.

I get all that. Remember too that in the 70s we had stagflation. Then Reagan came along and Voila! We didn't.
This was funny. Read a bit about what Volcker did at the time, please.


If the tax rate cut causes an increase in the GDP, you can have an increase in revenue while at the same time reducing the % of revenue to GDP.
You spend revenue, not %.

Actually, you spend %GDP as well, and this is important. Growth in the economy yields growth in wages and public employees will get a (in the long term) corresponding raise, employees of contractors will get a raise, contractor shareholders will expect more profit. This means public expenditures will grow approximately proportional to GDP.
So you better keep your government revenue stable in %GDP terms in the ceteris paribus ('tax rate change and no other change') case.


Summary:
I don't accept nominal dollars revenue as evidence for your assertion because there's too much noise in it.
You don't accept %GDP as evidence.
Anything in between is really messy stuff requiring a lot of (reading) effort.


Anyway, I don't care now any more. I understand there are more than a hundred million people out there who actually fell for the ridiculous notion that cutting taxes increases revenues.
There's no fun in discussing this. I actually spent hundreds of hours on learning fiscal theory stuff at the university, it was one of my specialisations. Your position qualifies as joke in-between, I simply cannot take you and the Laffer curve believers serious enough for a greater discussion effort.
Your opinion is entrenched enough to withstand evidence anyway.


Even Mankiw disagrees, and he's the North American right wing's posterchild economist.
http://gregmankiw.blogspot.de/2007/0...nd-cranks.html

other voices:
http://economistsview.typepad.com/ec...e-revenue.html

http://voices.washingtonpost.com/ezr..._curve_be.html


I figure that low tax revenue as a % of GDP is a good thing. More money in the pocket of them that made it.
This depends on the marginal rate of utility of public and private spending and is an altogether different issue.
State of the art is that there's no answer because scientists and philosophers still have no convincing way of handling diverse preferences.
The largely agreed-upon substitute for now is to simply live with whatever a democratic political system yields.