Capital Gains Rate Cuts Increase Revenues
By
Bat One
on January 26, 2007 at 05:29 am
5 Comments
Earlier this week, (with some passionate, semantic assistance from Robert 108) I noted that the tiresome liberal line about “tax cuts” causing reduced federal revenues, budget deficits, is a lie.
The basis for that conclusion was an article by economist Daniel Clifton at the American Shareholder Association website, which was based on numbers provided by the Treasury Department and the Left’s favorite source of econometric mischief, the Congressional Budget Office.
Well, Daniel Clifton wasn’t done. In another article, using the same source and the same simple, arithmetic comparisons, he shows that cuts in the capital gains tax rate by the Bush administration have generated hugely increased amounts of capital gains tax revenues, contrary to CBO forecasts and contrary to the incessant braying of the liberal Left and the MSM.
In short, the 15% cut in the capital gains tax rate has generated not the $5.4 billion loss in tax revenues as was predicted, but a revenue increase of $133 billion instead.
This is particularly significant because during the Bush administration, for the first time in our history, more than half the households in America own some form of stock equities (individual stocks, mutual funds, 401-k, IRA, SEP plans, etc.).
Americans are getting RICHER, not poorer as the Left would have us believe. And as Americans’ wealth increases, so too does the amount of tax revenues flowing to government coffers.
Federal budget deficits, which are shrinking rapidly, are NOT caused by tax rate cuts, but by too much federal spending instead.
Cutting tax rates doesn’t reduce government revenues. Tax rate cuts INCREASE the amount of tax revenue collected. This ain’t rocket science. It’s arithmetic.
Throttling the neck of the goose to try and squeeze out more golden eggs simply doesn’t make a lot of sense.
The basis for that conclusion was an article by economist Daniel Clifton at the American Shareholder Association website, which was based on numbers provided by the Treasury Department and the Left’s favorite source of econometric mischief, the Congressional Budget Office.
Well, Daniel Clifton wasn’t done. In another article, using the same source and the same simple, arithmetic comparisons, he shows that cuts in the capital gains tax rate by the Bush administration have generated hugely increased amounts of capital gains tax revenues, contrary to CBO forecasts and contrary to the incessant braying of the liberal Left and the MSM.
The debate about the capital gains tax cut is over. When Congress passed the 15 percent reduction on capital gains all we heard from the naysayers is this will produce massive deficits. When Congress extended the 15 percent rate in 2006 we heard the same tired rhetoric - only louder. Now the new leadership want to repeal this tax cut to generate revenue to the federal government. Based on the new data they may want to reconsider whether repealing this tax cut will generate any revenue to the federal government.
Today’s CBO report puts the debate to bed. We were told by the Joint Committee on Taxation (JCT) the capital gains tax cut would “cost” the Federal Treasury $5.4 billion in fiscal years 2003-2006. Thus, the initial CBO forecast (January 2004) forecasted capital gains revenue to be $42 billion in 2003, $46 billion in 2004, $52 billion in 2005, and $57 billion in 2006.
Well in what could now be considered the worst forecast in modern times we find out today capital gains tax collections were actually $51 billion in 2003, $72 billion in 2004, $97 billion in 2005, and $110 billion in 2006. For 2005 and 2006 collections nearly doubled the initial forecast.
Translation = total capital gains tax collections over this period were 68 percent higher than forecasted. But even more important, a loss of $5.4 billion is actually a gain of $133 billion. That is a swing of $138 billion in just short years since the January 2004 forecast. Oops!
In short, the 15% cut in the capital gains tax rate has generated not the $5.4 billion loss in tax revenues as was predicted, but a revenue increase of $133 billion instead.
This is particularly significant because during the Bush administration, for the first time in our history, more than half the households in America own some form of stock equities (individual stocks, mutual funds, 401-k, IRA, SEP plans, etc.).
Americans are getting RICHER, not poorer as the Left would have us believe. And as Americans’ wealth increases, so too does the amount of tax revenues flowing to government coffers.
Federal budget deficits, which are shrinking rapidly, are NOT caused by tax rate cuts, but by too much federal spending instead.
Cutting tax rates doesn’t reduce government revenues. Tax rate cuts INCREASE the amount of tax revenue collected. This ain’t rocket science. It’s arithmetic.
Throttling the neck of the goose to try and squeeze out more golden eggs simply doesn’t make a lot of sense.
di butler
Move_Zig
Gman
robert108