Standard deviations? Regressions? Chi-square? Whatever nonsense are you talking about now? Remove all the zeros and a mere child could do the math. The CBO on which you and others on the Left unwittingly rely said that the cut in capital gains tax rate would result in a $27 billion reduction in revenue. Instead revenues came in some $26 billion higher than originally predicted… an “insignificant” error of over 42%!!!

And this happened not just once, but both times the cap gains rate was cut… once under a GOP administration and once before under a Democrat.

That ain’t Voodoo, WOOF. And it ain’t statistical analysis or econometric modeling. It’s arithmetic! Perhaps you should learn some.

Revenue gains from tax rate cuts are a small fraction of the revenues that would have been collected had rates been untouched.

WOOF,

More rhetorical nonsense! Don’t you know when to retire gracefully and go lick your wounds?

1. Where’s your proof that this is so?

2. From what point do you start to determine just how much revenues would have been collected? And how exactly are those projections arrived at? After all, CBO and JCT projections have already been thoroughly discredited. Got anything authoritative to rely on instead?

In the long run gains are realized through sales. Pay me now at a lower gains rate translates into lost revenue later.

This would be true ONLY in a fantasy world in which the assets in question always increase in value and never, ever decrease. Furthermore, like CBO and JCT (hardly a compliment!) you are assuming a static, rather than dynamic model. That is, you assume that everything else is equal. But as Luskin and Clifton have clearly demonstrated, everything else is NOT equal. The increase in the supply of capital alone changes all such decisions.

Finally, let me remind you that when Mr. Bush proposed to privatize a portion of Social Security, on a purely voluntary basis, you were one of the most strident in opposing the idea by reminding us that markets do not always go up, but experience downturns as well… Exactly the opposite of what you now imply in relation to capital gains taxes.

“Pay me now at a lower rate” does not always translate into lost revenues later, as you’ve stated. Just ask the guy whose house appraised at $600,000 2 years ago, but won’t even bring an offer of $500,000 today. Or, if you prefer a Democrat example, ask the guy who didn’t sell Amazon.com or Global Crossing before the dot com bubble burst in late 1999.

the economy is still the proof in the pudding.

What the hell are you talking about? I thought the discussion was on tax revenue, which Bat One clearly demonstrated was increased by cutting capital gains taxes rather than decreased as projected by the sources you cited to back up your claim that extending the tax cuts would decrease revenue. So, if the facts don’t support you, change the subject?

Game over woof. You lost and you’re quickly moving from pathetic loser to drooling morn status.

The January 2004 CBO Budget and Economic Outlook lists reduced estimates of $46 billion for 2004 and $52 billion for 2005, which means CBO was forecasting a decrease in capital gains tax revenues of $27 billion from a two year total of $125 billion to a new total of only $98 billion for the same two year period.

Now to the 2006 CBO Budget and Economic Outlook Report, Table 4-4 on page 92 to see just what really happened. In 2004, capital gains liabilities totaled $71 billion and for 2005 the total capital gains tax liabilities totaled $80 billion.

While CBO had estimated a drop of $27 billion because of the capital gains rate cut from $125 billion to $98 billion, the Treasury actually took in $151 billion, $26 billion more than had originally been forecast by CBO BEFORE the rate cut was enacted!

As Luskin put it exuberantly,

…instead of costing the government $27 billion in revenues, the tax cuts actually earned the government $26 billion extra.

CBO’s estimate of the “cost” of the tax cut was virtually 180 degrees wrong. The Laffer curve lives!

Nor is the 2003 capital gains tax rate cut the only example of such a “cut” not “costing” the Treasury lost revenue, but actually increasing the tax revenue taken in. And the Congressional Budget Office (CBO) is not the only agency with bogus estimates and conclusions regarding tax rate cuts.

This from the July 2005 Report to the American Family Business Institute by economist Daniel Clifton, “LEARNING FROM HISTORY: JCT’S STATIC SCORE CAN NOT DETERMINE THE REAL REVENUE EFFECT OF REPEALING THE ESTATE TAX”

In 1997, Congress passed and President Clinton signed into law the Taxpayer Relief Act which cut taxes on capital gains, expanded savings vehicles, provided limited estate tax relief and attempted to simplify the tax code. The 1997 tax reduction initiated a series of tax cuts over the next seven years and, as they have consistently done, the Joint Committee on Taxation (JCT) overestimated the static revenue loss and the salutary effects of tax cuts on savings and investment. The most important provision of the act was a 28.6 percent reduction in the capital gains tax. The rate was reduced to the capital gains rate prior to the 1986 Tax Reform Act…

As a result, JCT estimated the capital gains tax reduction would net a gain of $7.8 billion to the federal treasury for the one month left in FY 1997 through FY 1999. Over the ten year period, however, JCT estimated the reduction would result in an overall $21 billion loss to the government coffers…

More growth meant that FY 1998 tax revenues surged $87 billion above the CBO’s FY 1998 forecasted revenues and $130 billion above the fiscal year 1999 expected revenues (7.7%). Through fiscal year 1999, JCT expected tax revenues to decline $19 billion from the original baseline. Yet, revenues came in $130 billion over expectations by the close of FY 1999.

Capital gains revenues projected by CBO to be $55 billion, $65 billion, and $75 billon respectively for 1997, 1998, and 1999, actually came in at $79 billion, $89 billion, and $111 billion.

For anyone interested in the statistical arcana, Clifton’s study explains in some detail why CBO estimates have been so consistently unreliable in under-estimating the revenue gains from capital gains tax rate cuts.

The CBO 2002 paper on “Capital Gains Taxes and Federal Revenues” cited by WOOF does have one interesting point to recommend it, however,

Because of inflation, the difference between the sale price of an asset and its basis overstates the income that the asset holder earns; taxes are thus imposed on phantom income created by inflation, a characteristic that the taxation of gains has in common with the taxation of interest income. At the same time, gains are treated favorably by not being taxed when earned but when realized, which is often many years later.

This is true insofar as cap gains are not, yet, indexed for inflation. Clearly they should be. But there are instances when capital gains are taxed when “earned” rather than when realized, and clearly this is NOT as it should be.

The Congressional Budget Office estimates, by their own published figures, were wrong, as are those who rely on them. Charlie Gibson’s statements regarding capital gains tax (rate) reductions were correct, as were his questions of Senator Obama… who blew it!

Which brings up another question… I wonder what the fair market value of such a website endorsement is, and if it has been properly reported to the Federal Election Commission at that value, as required by federal law?

Later.

Gee, I wonder if any deals have been struck in our impending Nationied socialized medicine fraud coming down the pike?

http://www.seiuhealthcare.org/nationalunion/Default.aspx

I have appointments at the gym and a MA class afterwards, but I would not miss an opportunity like this to prove your Brookings and CBPP talking points memo dead wrong.

In the meantime, perhaps you would find out who some of those so-called experts are… besides CBO… and the specific CBO document(s) your talking points memo refers to.

You might also explain why CBO is considered to be non-partisan when Director Orszag was appointed just last January… by Speaker Pelosi?