quietlife.net

the night my comment got eaten

12 Dec 2005

I am reposting this here, because I think the comment I tried to leave here got eaten by the NiT coment moderation monster.

In it, I am responding to some assertions about the tax situation:

Yeah, because tax cuts don’t lead to higher federal receipts or anything like that.

…

Barbieux, give me a break. It doesn’t take a genius to figure out that, even though there’s no proof that excessive revenue is caused by tax cuts, it does indicate that tax cuts do not necessarily aversely affect revenue.

(Uncle)

And:

Say Uncle has a point. These tax cuts have brought in more revenue… [diatribe against liberals snipped] (Glen Dean)

Reality check.

First, Uncle, that graph is retarded. It’s not adjusted for inflation. Tax revenues are not the highest in history (more here and here).

Second, a large amount of the recent increase in tax revenue was due to tax cuts expiring and other temporary anomalies, not due to the tax cuts themselves spurring growth, something the CBO itself has acknowledged:

The fiscal outlook for the coming decade has not changed much since the Congressional Budget Office (CBO) issued its previous baseline projections of the federal budget in March. Although the deficit for 2005 will be notably lower than CBO estimated then, the underlying projections of revenues and outlays for future years are similar to those presented five months ago. (emphasis added)

Neither is it true that there’s no evidence that tax cuts decrease tax revenue. There’s a preponderance of evidence. More here. It’s an interesting issue, to be sure, but not one that amateur-hour dishonest graphs that don’t even index for inflation aren’t going to help clarify.

Comments

brittney — December 13, 2005 at 12:56 · reply

It did not get eaten, it just needed my approval due to the links inside. Still, it was a comment worth reposting here, because the graph is retarded.

SayUncle — December 13, 2005 at 14:09 · reply

Your comment’s there. Still, I don’t buy that from 2003 to 2005 that inflation had that much of an effect. Also, they still came in at 1/2 point (several billion) over budget, which would be adjusted for inflation. And receipts as a % of GDP is a largely useless statistic. After all, if you tax less, people have more to spend which affects GDP. Also, showing it as a % of GDP is not necessarily an inflation measure.

cwage — December 13, 2005 at 15:33 · reply

Your comment’s there. Still, I don’t buy that from 2003 to 2005 that inflation had that much of an effect.

It didn’t have that much of an effect, which is why the graph is misleading. No indexing for inflation, small X-scale (any graph purporting to show the HIGHEST TAX REVENUE EVAR should raise warning bells if it doesn’t actually show tax revenue before … 2000), small Y-scale to make small differences seem bigger, etc.)

And receipts as a % of GDP is a largely useless statistic. After all, if you tax less, people have more to spend which affects GDP.

Well, useless or not, it’s the defacto frame of reference for measuring this sort of thing. If you tax people less people have more to spend, which does affect GDP. But the amount compared to other factors that also affect GDP is unclear – correlation does not equal causation. Tying any one action in a small time-frame with limited concrete isolatory evidence to changes in something as ginormous as GDP is almost always a bad idea.

SayUncle — December 13, 2005 at 15:50 · reply

I realize that correlation does not equal causation but, as the graph did, you take a small, relatively similar time frame without much variance in inflation, it doesn’t indicate that there is a correlation to high taxes = high receipts. Just sayin’.

And you’re right, it is a complex issue and the Snow graph is oversimplified.

Sumi — December 14, 2005 at 19:01 · reply

Hallelujah! Someone who demands accuracy in his assessment of an issue. Precious few of us out there. I despise the sort of lackadaisical (or hell, even painstaking but irrelevant) oversimplification of issues as much as I despise the misuse of those oversimplifications to justify idiotic practices.

I like the rest of your blog too, by the way. Your other entries show a considerable amount of thought and a sense of humor as well.

In other words- well done.

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