Omegavegeta wrote:
Gbaji wrote:
Oh. And also "revenue" is not the same as "tax rates". Just putting that out there for general consumption.
But "revenue" does equal "
taxes", when we're talking about the federal government's revenue, you semantically obsessed little birther, you.
But not "tax rates", which is what I actually said. Increases in "tax rates" are implied when someone says (as in the title) that someone is going to "raise taxes". Increases in tax revenue are a completely different animal. If I tax $100 at 20%, or $50 at 40%, or $200 at 10%, I will collect the exact same taxes. It should therefore be obvious that if I wish to increase
tax revenue that I can do this by either increasing the tax rate *or* increasing the number of dollars I'm taxing.
The latter choice can occur one of three ways:
1. Remove loopholes in the existing tax code.
2. Expand the scope of taxes (tax things that aren't currently being taxed). Note that this is pretty similar to the first option depending on how you look at it.
3. Increase the number of dollars involved in taxable areas of the economy (basically, fix unemployment, increase economic growth, etc).
These are the options (specifically 1 and 3) which the Republicans have continually argued are the best ways to raise tax revenue. But unfortunately, the Obama administration is fixated on a class warfare based tax increase, which will have minimal effect on our current deficit problem, will likely raise very very little revenue, and may have vastly more negative impact on future economic growth and employment. Basically, he's chasing after at best an $80B/year piece of tax revenue, while tossing away what could amount to $300-$400 Billion dollars of revenue a year as the "cost" of that tax hike.
The best case increase in revenue if Obama gets his way (reverting to Clinton era tax rates for those making more than $250k/year) is $80B/year. That assumes that no one changes their behavior as a result of the tax (very unlikely). But we're currently somewhere between $300-$400B down in yearly tax revenue, which has nothing to do with tax rates and everything to do with not enough money being invested in areas which cause economic growth and employment. Some of us argue that the reason we're still down, and the reason that number hasn't bounced back as it should have is precisely because of the looming threat of increased taxes on "the rich". Take that off the table (ie: make the Bush tax rates permanent for everyone), and that money will come rushing in. GDP will grow, corporate tax base will increase, and employment will increase.
Do that and instead of getting a paltry $80B/year in tax revenue and we gain in three ways:
1. Direct tax revenue will increase by far more than $80B/year. While it'll probably take several years to get back to the trend line (the $300-$400B/year number), we'll still take in many times more dollars in revenue due to simply broadening the tax base.
2. Increased employment also means decreased spending. For every person we employ and are now taxing we're also *not* paying unemployment and other social services for. This could be a direct savings of $150-$200B/year in addition to the revenue increase. Now we're getting somewhere near a half a trillion dollars of deficit reduction
per year, not just over 8 or 10 or whatever number of years Obama likes to roll his numbers into in order to make it look like its something worth doing.
3. Increased job growth and business activity also translates to increased GDP growth rate. This means that the calculation we use to generate relative debt works in our favor. So even if we're still running a deficit, the rate of the total debt growth relative to the total GDP growth is better. As I've argued many times in the past, you don't have to have a zero or negative deficit to decrease relative debt. You just have to grow the economy at a rate higher than you're growing your debt. This is why during the 2006/2007 years under Bush, our debt percentage shrank even though we were still running deficits. The same math works even when a Democrat is in office.
Those are three factors that Obama is tossing in the trash with his tax plan. It really is moronic what he's proposing. Unless, of course, his actual objective is to keep unemployment high, economic growth low, and basically keep extending our economic problems as long as possible. Which one might think is ridiculous, but then we can also argue that the social liberal movement has made greater gains as a result of this one economic recession than they made in the previous 40 years, so maybe that is the goal. I don't know. But I can say that chasing after $80B/year in tax revenue at the cost of greater tax revenue and economic recovery is pretty stupid.
And just to bring this back to the topic, that's what Republicans are talking about when they talk about increasing revenue. So when you hear a Republican talk about this, pay close attention to what he actually says. It's not correct to assume that because he acknowledges the need to increase federal revenue that this means he's on board with raising tax rates (on the rich or anyone else). Those are *not* the same thing.
Thanks for sharing the POV. 
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