How Much Is This Tax Cut Gonna Cost Me, Doc?

Those who fret about the cost of a tax cut are looking at the question from the wrong end of the telescope.

You walk into a shoe store. The salesman runs up to you. “Great news!” he beams. “We’ve just slashed our prices 20 percent!”

“Yikes!” you say. “I can’t afford a price cut like that! I’m outta here.”

“No, no — maybe you didn’t hear me,” the clerk says. “We’re cutting our prices 20 percent. Cutting, not raising.”

“I heard you just fine,” you say. “I’m not paying an outrageous increase like that!” And you storm out the door.

The preceding scenario makes no sense — except in the bizarro world of government finance. For that is precisely how many people speak, when they speak of taxes.

Take The Washington Post, which tore into Paul Ryan the other day for dancing around a question about tax cuts.

“Paul Ryan wants to tell you about the wonders of the 20 percent cut in tax rates that he and running mate Mitt Romney propose,” the paper intoned. “He doesn’t want to tell you how much it will cost.” The paper went on to praise Chris Wallace of Fox News for repeatedly asking Ryan “this basic question” and “citing projections of a 10-year cost of $5 trillion.”

The Post is not alone. The New York Times likes referring to the “cost of the Bush tax cuts,” for instance. So do liberal organs such as ThinkProgress, the American Prospect, and The Nation. Not long ago, the Annenberg Center’s FactCheck.org said Romney’s tax-cut proposals “would cost $480 billion a year” (that’s the answer the Post wanted Ryan to cough up).

In his State of the Union address, President Obama said the U.S. was “poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break.” After Wednesday night’s presidential debate, analysts on NPR discussed how Romney planned to “pay for” his tax cuts. Inside the Beltway, wonks even talk of “tax expenditures”—by which they mean exemptions, loopholes, and similar devices that lower a taxpayer’s total bill.

Now, from a government accountant’s perspective, there is little difference to the Treasury between spending $14 billion on a Ford-class aircraft carrier and reducing revenue $14 billion by lowering taxes. If the federal government is running a deficit, then the deficit goes up by $14 billion no matter which route you take. Likewise, a 20 percent price cut on shoes will impose a cost—not on the customers, but on the store or the shoe company.

But, funny thing. A few days ago The Tax Policy Center released a study looking at what would happen if the U.S. goes over the “fiscal cliff,” the point at which automatic spending cuts occur and the Bush (and other) tax cuts expire. And look how it was covered:

“Expiration of Tax Cuts Would Be Costly to Taxpayers,” wrote The Boston Globe. “The Fiscal Cliff Will Cost a Median-Income Family $2,000,” said The Atlantic. “What will falling off the ‘fiscal cliff’ cost your household?” asked CNBC.

And The Huffington Post, which in August ran this headline — “Bush-Era Tax Cuts Will Cost U.S. Nearly $1 Trillion Over Next Decade” — last week said the expiration of those tax cuts would “Cost (a) Typical Middle-Class Family $2,000.”

The upshot of all this is that the Bush tax cuts have “cost” billions of dollars—and the failure to extend them will cost billions more. You could chalk this up to Glass-Half-Empty Syndrome: No matter what happens, we’re all hosed. But the real explanation is not as bad as that. It’s worse.

The real explanation is that those who fret about the cost of a tax cut are looking at the question from the wrong end of the telescope. They identify with the tax collector, not the taxpayer. Like the accountant for a shoe company, they’re not thinking about how much money you stand to save — but how much they stand to lose.

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  • SugarFree||

    Damn, Hickle. What did you do to deserve that pic?

  • SugarFree||

    *did we* I need to stop drinking in the morning.

  • 16hnny||

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  • Sevo||

    Gotta be the blessing that did the trick. That skydaddy is strong mojo!

  • Paul.||

    And why is the dude from Jane's Addiction in the background?

  • BakedPenguin||

    Because nothing's shocking?

  • Specail Sauce||

    "Been Caught Stealing"... it all makes sense.

  • sarcasmic||

    And here I thought it was Ronnie Wood.

  • Paul.||

    Ron Wood is prettier than the guy from Jane's addiction.

  • Paul.||

    Here's a shot of the Pelosi event from earlier.

  • db||

    Those are some of the ugliest happy people in the world. When politicians have a big ol' belly laugh, you know someone's getting the shaft.

  • Loki||

    The most frightening sound in the world is the sound of politicians cackling.

  • Anomalous||

    Crappy slimy people laughing.

  • Whiterun Guard||

    No, we still don't know what Ronnie Wood was doing at that convention, so don't ask.

  • Almanian's Evil Twin||

    ^^this

    It's Ronnie Wood, not Perry Ferrell. Sheesh!

  • Paul.||

    http://www.musicrooms.net/file.....682141.jpg

    Ron Wood is much better looking than Perry Farrell.

  • Sevo||

    What the hell; he's better looking than Pelosi, too.

  • Pro Libertate||

    "It's Evil! Don't touch it!"

  • ||

    "Heroes?" *spit* "What do they know about a day's work?"

  • Caleb Turberville||

    You might actually fairly conclude that tax cuts do have a cost, so long as it interferes with the ability of revenues to pay for outlays, but that would depend on your perspective regarding the value and necessity of those expenditures.

    Also, is the effect of keeping the money in the private sector enough to offset the difference between revenue and outlays?

  • ||

    You can conclude that tax cuts have a cost, if you believe that the government has some sort of divine right to that money.

  • Caleb Turberville||

    I was referring to the cost of deficits. But Rasilio wised me up (below) to the difficulties in managing deficit-spending that focuses on the revenue side of the equation. It seems that it's definitely government outlays that should be the focus of budget management.

  • Restoras||

    A flat tax rate on all personal income of 15%; no capital gains taxes, no corporate income taxes.

    If you can't pay for it with that, you can't have it.

  • R C Dean||

    Cap gains are still income, as long as you only count the gains after accounting for inflation, so I would have cap gains taxed as ordinary income with an inflation adjustment.

    I also have no problem taxing corporations, as long as they get to deduct any distributions they make to shareholders.

  • robc||

    Ger rid of corporate taxes and make all corporations pass-thru entities.

  • Restoras||

    No, capital gains are not income. The invested pool of money has already been taxed. That should be sufficient for the beast.

    Also, taxes, as necessary as they are to fund government operations, are a penalty on the behavior being taxed. Since we are taxing income (working, a virtuous activity) it doesn't seem to me a good idea to tax other virtuous activity (saving, investing) just because you can.

  • Iasion||

    Book V, Chapter II Of the Sources of the General or Public Revenue of the Society

    The revenue which must defray, not onlythe expenceofdefendingthe societyandof supporting the dignity of the chief magistrate, but all the othernecessary expences of government for which the constitution of the state has not provided any particular revenue, may be drawn either, first, from some fund which peculiarly belongs tothe sovereign or commonwealth, and which is independent of the revenue of the people;or, secondly, from the revenue of the people.

  • T o n y||

    Libertarians' obfuscation on tax rhetoric can only be deliberate. You acknowledge that, from the Treasury's perspective, a tax cut and an expenditure of the same amount are the same. And that raising taxes on people raises their expenses. Both are true at the same time? What a confusing thought!

    But the basic arithmetic of budgeting (and libertarian economics schools aren't equipped for more complex analyses of tax policy effects, however much they try) seems lost on so many people here in a way that can only amount to deception. Yes you want to get rid of the vast bulk of the modern state. But instead of trying to sell that to people (which would be the honest thing to do), you champion any and every reduction in revenue that ever was or ever will be, then blame too much spending for budget problems.

    Too much spending is only the problem if we don't want the programs we're paying for. But, largely, we do. That people think we can get them for cheaper than they are is thanks mostly to leaders and talkers who promise great magical outcomes from tax cuts that have long been discredited by worldly facts. Both parties, as political creatures, tend to shy from raising taxes and transfer responsibility of paying for our programs from ourselves to Chinese creditors. But only one is so mendacious about it as to use lies about the benefits of tax cuts as a backdoor method of destroying programs they don't like but that the people do.

  • Whiterun Guard||

    csb

  • Sevo||

    T o n y| 10.8.12 @ 12:16PM |#
    "Libertarians' obfuscation on tax rhetoric can only be deliberate."

    Shithead's 'confusion' on tax matters might be accidental; shithead might be that stupid.
    Shithead's 'confusion' on tax matters might be deliberate; shithead might mope to confuse someone.
    So, shithead, which is it? Fool or knave?

  • Calidissident||

    Tony, paying for the stuff we're currently paying for would require pulling in revenues as a % of GDP that we have never come close to attaining. And are Democrats not dishonest for implying that we can do that by only taxing the rich? Tax rates and revenues have little correlation. In fact, tax revenue as a % of GDP was higher from 1980-2010 than it was from 1950-1980, despite much lower rates

  • T o n y||

    If Democrats are saying we can balance the budget only by taxing the rich, then they are lying. But I don't think they've said that exactly.

    There is a correlation between changes in tax rates and changes in revenue/GDP, but it's not very noticeable on, say, a 100-point scale (reason loves to trot out the 18% thing and pretend that correlated fluctuations around 18% aren't a big deal). What there definitely isn't a major correlation between are tax rates and economic growth--the latter of which is the big variable with respect to revenue.

  • Calidissident||

    When you're spending close to 25% of GDP, then yeah, fluctuations around 18% don't matter much. And way to totally ignore statistical proof of the bullshit you peddle. We had less revenue as % of GDP during the Golden Age of 70-90% marginal tax rates than we did during the period of draconian tax cuts to the rich from Reagan onwards

  • The Hammer||

    Tony has been getting more nasty and desperate as the election gets closer. Just ignore him for the rest of the month and I'm sure he'll go back to being merely stupid.

  • T||

    If Democrats are saying we can balance the budget only by taxing the rich, then they are lying. But I don't think they've said that exactly.

    "I won't raise taxes on the middle class" is a pretty clear cut signal the wealthy are the only source of new tax revenue. Admittedly, that was a lie, but if we're going by what politicians say....

    I guess he could tax the poor, but they generally don't have enough to steal. Cutting benefits would accomplish the same thing, and be indistinguishable from the Treasury's viewpoint, though.

  • PapayaSF||

    Once again, I ask Tony: if Congress consistently spends 10-40% more money than they get in taxes, how much do taxes have to be raised to balance the budget?

    Also: tax rates aren't the same thing as tax revenue.

  • Sevo||

    T o n y| 10.8.12 @ 12:58PM |#
    "If Democrats are saying we can balance the budget only by taxing the rich, then they are lying. But I don't think they've said that exactly."

    Yeah, shithead, I'm sure you'll find weasel-words to find a way around it.

  • Almanian's Evil Twin||

    God, your stupidity is a thing to behold.

  • KDN||

    And with such verbosity!

  • wareagle||

    the Tony wing hates tax cuts because it assumes all money belongs to the govt in the first place and only through its benevolence can those earned it actually keep some of it.

  • Restoras||

    Well, of course! Our rights only come from the government so the government needs the money it lets us borrow from it in order to preserve those rights, create new ones, eliminate ones it doesn't like, etc.

  • T o n y||

    Your moral preoccupations and arithmetic are two entirely different subjects.

  • Restoras||

    They aren't my moral preoccupations, they are yours. And I can't halp it if you don't understand math.

  • The Craig||

    Hey, Tony is a critical thinker and doesn't need math, or so he tells us.

  • Loki||

    Math is for people who actually want to do things. Feelings are for "thinkers".

  • sarcasmic||

    spending - revenue = deficit

    correct?

    Here's the basic flaw in your fuzzy math: Spending is not a constant. It is a variable.

    Though for someone who honestly believes that inaction is action, that not giving is taking, and that not taking is giving, it comes as no surprise that you fail at basic algebra as well.

  • Dr. Frankenstein||

    Spending is an upward variable. The only question is the percentage of the increase

  • T o n y||

    Is there a point in there somewhere?

    Both spending and tax rates are variable and the result of Congressional policy.

    And inaction is action. Explain how it isn't. What is "inaction"? How can you be doing literally nothing?

  • sarcasmic||

    And inaction is action. Explain how it isn't. What is "inaction"? How can you be doing literally nothing?

    I rest my case.

  • T o n y||

    Okay, so you're doing the action of resting your case. Now try doing nothing.

  • Raistlin Majere||

    Even Obama had the capability to know when he got his ass kicked. Are you stupid or masochistic?

  • AlmightyJB||

    You didn't earn that.

  • Anonymous Coward||

    You acknowledge that, from the Treasury's perspective, a tax cut and an expenditure of the same amount are the same.

    Tony w/spaces, you poor, simple-minded dolt, unless the Treasury department has stopped employing accountants, even they know that a decrease in the debit column is not the same thing as an increase in the credit column.

    tend to shy from raising taxes and transfer responsibility of paying for our programs from ourselves to Chinese creditors.

    Just thought this was good to quote as it exposes Tony for the mindless xenophobe that he is. China holds only 8% of the total debt, a meager slice compared to Federal Reserve and intragovernmental holdings.

    Not only is Tony w/spaces the worst sockpuppet ever, he's also a racist.

  • sarcasmic||

    even they know that a decrease in the debit column is not the same thing as an increase in the credit column.

    This is a guy who feels that not taking money from a rich person and giving it to a poor person is the same thing as taking money from a poor person and giving it to a rich person.

    In his "mind" there is absolutely no difference.

    None.

    He's a moron.

  • R C Dean||

    Fun fact: Over the past few years, total Chinese holdings of Treasuries are flat to down, while the Fed has acquired Treasuries equal to approximately 75% of new issuances.

    The Chinese haven't financed anything for a few years. Instead, we have simply printed the money.

  • PapayaSF||

    I am not an expert in finance, but the idea that 3/4 of the deficit is funded by one part of the government selling bonds to another part of the government totally freaks me out. How is this even possible? Isn't this obviously a b.s. accounting trick that can only blow up, sooner or later? Is there some reason Romney and Ryan are not hammering on this point? I don't get it.

  • sarcasmic||

    Is there some reason Romney and Ryan are not hammering on this point?

    Why would they? They plan to do the same thing. It's SOP for both parties.

  • PapayaSF||

    Well, they talk about cutting the deficit. Bringing this up and freaking people out about it seems like a good way to make their case.

  • sarcasmic||

    Well, they talk about cutting the deficit.

    So? It's not like they plan on doing anything about it.

    Bringing this up and freaking people out about it seems like a good way to make their case.

    It would be a good way to end the two party monopoly on power, which is exactly why neither one will mention it.

    It's taboo.

  • PapayaSF||

    I don't know why. Isn't the government buying its own debt something that started under Obama?

  • ||

    I don't want the programs we're paying for. I don't want to pay to have a standing army that makes an attack against us more likely. I don't want to pay to subsidize the elderly, or the poor, or children, or energy companies. I don't want the federal government busting marijuana dispensaries.

    I do like roads, and National Parks and Forests are quite nice too.

  • T o n y||

    So get 50%+1 of the people to agree with your preferred set of programs. I agree with you on a few of those counts.

  • dinkster||

    ALL ONE OR NONE! I read that on my bottle of soap, I think you've read it too.

  • dinkster||

    RoAdS! RAODS! ROOOADS!

  • Enjoy Every Sandwich||

    Too much spending is only the problem if we don't want the programs we're paying for.

    Bullshit. If we're spending more than we can afford it doesn't matter how much "we" want the programs. We're still spending too much. I can want a limo with three supermodels in the back; I can want it a lot. That doesn't mean I'm entitled to it and that doesn't magically create the money to pay for it.

    You want to talk about basic budgeting? That's a laugh. Budgeting is making choices based on the understanding of scarcity. You deny the existence of scarcity, so how could you possibly budget?

  • T o n y||

    We can't afford them because taxes have been cut so much! This is the fundamental dishonesty here... we've cut taxes to historic lows, then the starve-the-beasters and their libertarian poodles come along and say, "look at how we can't afford all those programs, which I'm ideologically opposed to regardless!"

    Expiring all the Bush tax cuts would reduce the deficit by more than half. You're just being a lying ideological dick to pretend that we have no choice but to enact your preferred set of programs over the ones the country actually wants.

  • Red Rocks Rockin||

    Expiring all the Bush tax cuts would reduce the deficit by more than half.

    Actually, it won't:

    http://data.bls.gov/timeseries/LNS11300000/

  • Enjoy Every Sandwich||

    Horseshit, taxes have not been cut to "historic lows". Losses in revenue are due to the recession. Jacking up taxes won't fix that--it will make it worse.

    Even if taxes were put up as high as you'd like (the rate would probably be 1000% if you had your way) you still won't be able to get around the fact of scarcity. You will still have to make choices. You will still have to cut something. Why do you persist in denying this?

  • dinkster||

    I'm going to take a wild guess that my exposure to mathematics greatly out paces your own. Of course, differential geometry and tensor analysis isn't typically a prereq for economics and the layman. Maybe that is why I have such a hard time with what you mean by "basic arithmetic".

  • Paul.||

    The preceding scenario makes no sense — except in the bizarro world of government finance. For that is precisely how many people speak, writes A. Barton Hinkle, when they speak of taxes.

    The people in the government are speaking the truth. "We" can't afford a tax cut. By "we", they're referring to themselves. The people who live and spend other people's money can't afford to lose-- or take less of other people's money.

  • Rasilio||

    Actually Barton, you are buying into the lie they all want you to believe.

    That government altering the tax rates has ANY impact on tax revenues. There is simply no evidence to support this assumption. It is exactly equivalent to the medieval belief that Maggots either lived inside of all of us and came out after we died, or they spontaneously generated on us after we died because it is based on the same simplistic observation.

    The problem is that in a chaotic system like an economy there are feedback mechanism's that can amplify or dampen any action you take, further you are taxing individuals with free will and the ability to plan in response to your changes.

    The official story (and CBO analysis) is that the Bush tax cuts cost us the government around $130 billion a year in revenue. But this assumes that people do not change their behavior at all as a result of the tax cut and that there are no secondary effects of the tax cut which could amplify or counteract the cut, 2 things we know to be false.

    So what happens when you look at year over year revenue after those tax cuts were passed? Was there any measurable decline in tax revenues (and corresponding tax savings for the public)? Well no, none at all. Before the tax cuts were passed revenues were declining or flat, after the tax cuts were passed revenues grew rapidly.

  • Rasilio||

    Obviously this does not prove that tax cuts cause revenue to grow because there are other factors at play in the economy that could be overwhelming the cut, but still if there was any truth to the idea that changes to taxes impacts revenues then there should be some correlation between tax changes and tax revenues right?

    Turns out that no there isn't. If you go back and plot year over year revenues back to World War 2 and then correlate those to major revisions of the tax code you find that there is none at all. If you cut or raise taxes revenues are equally likely to go up or down or stay the same.

    This does not mean that government could not raise taxes intentionally, but to do so would require a radical revision of the tax code, something like adding a consumption tax on top of the existing taxes, not tinkering around the edges of the existing tax code by changing deductions or rates slightly. The sort of small changes that have a shot of getting through Congress are simply too small to be measured in their impact on the economy or tax revenues and only simplistic knowingly false analyses like what the CBO does can but a dollar value on them.

  • Caleb Turberville||

    So, there's no correlative relationship that we can use to predict the revenue inlays at a certain taxation rate?

    In that case, it would seem that the sanest way of operating a budget is to manage the outlay side of the ledger to keep at as manageable as possible.

  • Almanian's Evil Twin||

    Madness. Sheer madness.

  • KDN||

    it would seem that the sanest way of operating a budget is to manage the outlay side of the ledger to keep at as manageable as possible.

    You're a grandparent-hating racist.

  • sarcasmic||

    manage the outlay side of the ledger

    How can outlays be managed? According to Tony outlays are a constant, and the only variable in the equation is revenue.

  • wareagle||

    unless someone is lying, past evidence shows that reducing tax rates results in MORE money going to the Treasury. People who keep more of what they earn often spend or invest it and there are benefits from that.

    How often do even govt folks admit that taxing an activity generally means less of it. Why, then, do they refuse to apply that to income or productivity?

  • T o n y||

    No it doesn't. You're trying to correlate tax rate reductions with general increase in revenue (which happens regardless in times of economic and population growth). But the comparison would have to be between revenues in a given timespan and revenues in a counterfactual history of that timespan with different rates. No economists thinks that tax cuts pay for themselves (i.e., that revenues wouldn't have been higher in these periods with higher rates).

  • Calidissident||

    Well Tony, if your revenues are increasing, then you can still increase your spending and remain in balance. But that's never enough. We have to increase it MOAR. And as I mentioned above, tax revenue as a % of GDP was higher from 1980-2010 than it was from 1950-1980, despite much lower rates

  • Hyperion||

    ^THIS^. They will never stop spending at an accelerated pace no matter how much they take in. It will never, ever be enough.

  • Caleb Turberville||

    Rasilio's argument is that economic models of government revenue are often too simple to account for the chaotic, real-life behavior of the studied variables.

    In that case, a historical, longitudinal study of tax revenue would suffice (so long as population growth was held constant, I suppose?).

    And, so according to Rasilion, rates show no predictive correlation with revenue.

    Have I got that right?

  • Rasilio||

    Yes, with one caveat.

    This only applies to relatively minor changes to the existing tax system where you tweak brackets or rates or deductions, etc.

    It is possible to create a tax change which would correlate to a change in revenues but it would be major new legislation that was a radical reworking of the tax code such as adding a whole new wing to it.

  • Rasilio||

    Oh and please don't call me Rassilon, I'm just an every day average Time Lord, not the founder of the entire race.

  • wareagle||

    stop with the "tax cuts paying for themselves" talking point twaddle. It's not the govt's money; it belongs to those who earned it. And economists can think what they like but it won't help them prove a negative - it is impossible to know if the 80s would have been the 80s without reductions in income rates.

    Of course, they could look at periods where top marginal rates were 70% or more and compare those with times when rates were lower. They could even do the accounting thing wherein inflation is factored in. What they would find is that people keeping more of what they earn is a net good for society.

  • T o n y||

    When we get to a Laffer-relevant moment in tax rates, we can have that debate and I might even agree with you. We're not there. We're talking about restoring funding that was taken out recklessly with no regard to cutting programs.

    People keeping more of what they earn... to a certain point, right? It doesn't go all the way to anarchy being a net good for society. So how do you know we're on the ride side of that line? How low do taxes have to be before you support a hike?

  • Rasilio||

    My experience is that they are cherry picking their data, finding one or two cases where they cut taxes and revenues increased.

    Obviously this *can* happen if the tax rate spurred larger volumes of economic growth, it can even happen for reasons completely unrelated to the tax change.

    However at one point about 2 years ago I went through and took a chart of government revenues and looked up every significant change to tax law since 1950, there were 14* of them split evenly between "tax hikes" and "tax cuts". Then I looked at 3 and 5 year average revenues following implementation of those tax changes.

    What I found was that regardless of whether the tax change was supposedly a cut or a hike the 3 possible outcomes (decreased, increased, or flat revenue) were all essentially equally likely being split 3/2/2 in both cases.

    Obviously the sample size is somewhat small but that is the poster child for no correlation whatsoever.

  • GW||

    Laffer curve. The simplest explanation for all of this.

    Some tax cuts will pay for themselves, others will not. It depends where you are on the curve and the shape of the curve. Those are the only real items to consider.

    Either way, it's still my fucking money, and I want it.

  • Hyperion||

    Either way, it's still my fucking money, and I want it

    Obviously, the Kochtopus has gotten its long tentacles into another lost soul.

  • GW||

    I'm just saying.....whether the cut generates more revenue or not is not justification for not cutting the tax.

  • Hollywood||

    That, and whether Ricardian equivalence actually holds in real life, which I tend to doubt since people are too dumb to be that forward-thinking.

    I agree with your moral argument. The mere fact that we are debating whether the government's revenue will go up or down in response to a tax cut means we are giving more consideration to the government's budget than to those belonging to individual citizens.

  • GW||

    Exactly. Whether or not the government benefits from the cut simply concedes that it's the government's money, not the taxpayer's.

  • T o n y||

    It's so cute when a libertarian discovers a point necessitated by his moral first principles.

  • RPR2||

    That photo will be exhibit A at the deficit trials

  • Restoras||

    These will be show trials, right? Will they be broadcast on C-Span?

  • The Late P Brooks||

    Just go ahead and use the frame from the video where little ancillary monster emerges from her mouth; we all know it's coming.

  • ||

    The funniest/saddest thing about all this is that it doesn't even seem to matter anymore if the government has tax money coming in or not. They just fabricate the difference out of whole cloth.

  • Lisa||

    True. They want the psychological impact of us paying taxes. Maybe we could fill out pretend tax forms and write pretend checks and pretend to feel whipped afterwards, but get to keep our money.

  • The Late P Brooks||

    "Basic math" in the TonyVerse:

    2 + 2 = 5

  • Hyperion||

    or

    infinite spending + 100% tax rate = balanced budget and thriving economy

  • MJGreen||

    I'd say it's more like 4 - 2 = 5.

    The solution is constant! Everyone knows that the answer is 5. Libertarians just can't handle the complex math behind the arithmetic.

  • Anomalous||

    2 + 2 = 5, for large values of 2.

  • dinkster||

    Divide by zero. But say zed, cuz I bet he is Canadian.

  • Hyperion||

    This is all just a game of time. It's just a matter of time. The progressives/dems believe that we can never cut spending and that government can never stop growing. Their solution? More revenue. So what happens when we get to taxing everyone 100% and continue to increase spending? That is where their solution leads to, so what is the answer when we finally get there? Tony?

    Also, how can it not be true the government thinks every dime of everyones money belongs to them, when they come right out and say that tax cuts cost money? To try to spin that is lunacy, only the dumbest of the dumb sheep would buy into it.

  • The Late P Brooks||

    I saw a clip of Jeffrey Sachs this morning, saying,

    "Moar taxes, plz!"

    The best part is where they don't even try to pretend there is any qualitative difference between types of taxes. Just moremoremore. And don't bother thinking there is any room to cut spending; we are barely scraping by as it is. You might as well send the Marines in to slaughter everybody in New Orleans as cut a dollar from the federal budget.

  • Hyperion||

    If you cut even one dollar from the federal budget, wimins and childins will die in the streets by the trillions, the very next day.

  • Stormy Dragon||

    The problem is that, unlike buying shoes, we don't make individual choices on whether or not to buy or not buy the shoes. A better analogy would be if the shoe store, rather than advertising a 20% cut for everyone, offered to cut 20% for half of the customers by shifting that portion of their purchases to the other half of the customers.

    If I go in to buy a pair of New Balance sneakers, I very well might decide I can't afford their 20% off on Monolo Blanichs.

  • ant1sthenes||

    A better analogy would be if the shoe store, rather than advertising a 20% cut for everyone, offered to cut 20% for half of the customers by shifting that portion of their purchases to the other half of the customers.

    If government budgeted like a household, you would be right. But since government budgeting is spending is done on the basis of "spend everything you take in, and then as much as you can get away with borrowing before people freak out", it's reasonable to assume that the cost of tax cuts are not passed on to other taxpayers, nor to beneficiaries of government programs (which continue to grow year after year), but to those that loan the government money.

  • Hyperion||

    offered to cut 20% for half of the customers by shifting that portion of their purchases to the other half of the customers

    Please don't give them more ideas. They will try this and also impose a penaltax on the higher earners who refuse to pay for the higher priced shoes.

  • sloopyinca||

    I still don't understand why Ron Wood is such a big Pelosi fan. He's in almost every photograph with her but I don't even think he's a US citizen.

  • Rasilio||

    Well there's the reason, it means he hasn't got to deal with the results of her votes, he can just escape back to his country of origin.

  • Dick Fitzwell||

    And who ultimately bares the cost of government expenditures--who has to pay for these "costs?" The taxpayers, right?!

    Tell me again how letting the taxpayers keep more of their own money actually costs them money.

  • OldMexican||

    Re: Tony,

    You acknowledge that, from the Treasury's perspective, a tax cut and an expenditure of the same amount are the same.


    Where?

    And that raising taxes on people raises their expenses. Both are true at the same time? What a confusing thought!


    You're too easily confused.

    If the local thief decides not to rob me of my hard-earned cash, that is not an "expenditure" from his part. Losing that money, if he decided to rob me, would be a LOSS from my part. So if he decides not to rob me, both of us are no worse off. Instead, if he DOES rob me, he's better off but I am WORSE off.

    Which means that taxation is a totally true zero-sum game, whereas tax cutting is NOT, ceteris paribus.

    The mistake *YOU* make is factoring in the thief's wish list and then conclude that the unfulfillment of his wish list is his "expenditure."

    But the basic arithmetic of budgeting


    You mean in your fantasies where the budget is an immobable object?

    Too much spending is only the problem if we don't want the programs we're paying for.


    No shit!

    But, largely, we do.


    And I want a Ferrari. Does not mean I get one paid for by others. Just because the programs are well liked does not give support to the idea a) they can be paid through constant and indefinitive thievery and b)
    that they ought to be paid by others.

  • T o n y||

    Again, your anarchist moral obsessions are a completely different subject from budgeting.

    Would you rather talk about how addition and subtraction work, or about whether people should or shouldn't be free to enact single-payer healthcare schemes?

  • OldMexican||

    Re: Tony,

    Again, your anarchist moral obsessions are a completely different subject from budgeting.


    So is revenue and budgeting, when it comes to government - totally different planets. Which explains the current deficits.

  • T o n y||

    Our deficits are not explicable by the fact that taxation is evil theft.

  • OldMexican||

    Re: Tony,

    Our deficits are not explicable by the fact that taxation is evil theft.


    No, they're explainable through pointing out that government dwellers are all a bunch of thieves. That taxation is thievery is a separate argument altogether.

  • Juice||

    People are free to enact single payer healthcare schemes. Oh, you want to force everyone else to pay for these schemes? Well...

  • ant1sthenes||

    If you think cutting taxes costs money, then you must think raising taxes saves money. By that logic, a 100 percent tax rate would mean Washington isn’t spending anything at all.

    No, it just wouldn't be spending anything on not taxing people.

  • OldMexican||

    The Huffington Post, which in August ran this headline — "Bush-Era Tax Cuts Will Cost U.S. Nearly $1 Trillion Over Next Decade"


    This is the exact same logical mistake that Tony makes: factoring in someone's wish list as part of the economic equation to then conclude the lesser revenue is a "cost."

  • Restoras||

    I don't think it's a mistake of logic - it's a mistake of wilfull ignorance.

  • Calidissident||

    To be fair, conservatives and libertarians do this by mentioning the $800 billion stimulus when a large portion of that was tax cuts

  • R C Dean||

    About a third, as I recall.

  • PapayaSF||

    Although I think most conservatives and libertarians would point out that while broad-based, permanent tax rate reductions can spur economic growth, "targeted" and temporary tax cuts and gimmicks like one-time rebates probably won't.

  • Calidissident||

    True, but that doesn't make them spending

  • PapayaSF||

    I think tax rebate checks count as spending.

  • Calidissident||

    Yeah, I'd agree, but I think the Obama stimulus were payroll rate cuts, which isn't spending. Bush's rebates would count IMO

  • PapayaSF||

    Of course the irony there is Democrats trying to do an economic stimulus by defunding the social programs they take credit for, but which were already going broke.

  • T o n y||

    Did an equivalent dollar amount in spending cuts happen? No? So it looks like we've been incurring the costs, as debt.

    What's so wrong with requesting that politicians have the balls to propose cutting programs before they get a tax cut? And what's so wrong with requesting that politicians propose a revenue stream to pay for such things as multitrillion-dollar wars? Do you even think we should raise taxes to pay for wars? Or should we only ever cut taxes, forever and ever, and that's why you're the logical and sane one?

  • Calidissident||

    How about we don't fight stupid unnecessary wars. And base our spending on revenue and not the other way around?

  • T o n y||

    Based on an arbitrary set of tax rates? The ones Bush preferred perhaps, because he was so right on everything else?

    The programs we have should be the result of political demand, and revenues should be set to pay for them (in normal times).

  • OldMexican||

    Re: Tony,

    Based on an arbitrary set of tax rates?

    ALL tax rates are arbitrary. There are no natural tax rates.

    The programs we have should be the result of political demand, and revenues should be set to pay for them (in normal times).

    You can set the rates to whatever pie in the sky notion you like. That does not mean a) people will pay as if they did not act as self-interested individuals and b) people had somehow a personal aversion to money.

  • T o n y||

    I'm saying rates shouldn't be arbitrary but should cover the spending we incur in normal times. Like, responsible budgeting.

    Calidissident wants to set spending (meaning determine national policy) based on how much revenue the Treasury is getting, though he didn't specify anything about that revenue, like what rates should be. So I guess in a recession we have to automatically cut grandma off and, assuming she survives, maybe reinstate her healthcare when growth returns?

  • OldMexican||

    Re: Tony,

    I'm saying rates shouldn't be arbitrary but should cover the spending we incur in normal times.


    The Spending itself is arbitrary, ipso facto the rates will be arbitrary. You cannot escape from that, Tony, no matter how much you want to rationalize it.

    Like, responsible budgeting.


    A thief budgeting to feed his family with the proceeds of his thieving is NOT a responsible thief, so by extension his budgeting is not "responsible budgeting" either.

    Calidissident wants to set spending (meaning determine national policy) based on how much revenue the Treasury is getting,


    Good for Calidissident!

    Who gives a flyin' fuck?

    So I guess in a recession we have to automatically cut grandma off and, assuming she survives, maybe reinstate her healthcare when growth returns?


    I would just let YOUR granma croak. Mine has money she saved because she was a) not a thief and b) smart.

  • PapayaSF||

    So I guess in a recession we have to automatically cut grandma off and, assuming she survives, maybe reinstate her healthcare when growth returns?

    Of course Tony's going to say that's the very first thing anyone would cut. How about a pay cut for all federal employees making $100K or more per year? How about we cut cowboy poetry festivals? USDA magician's rabbits inspectors? "Green" boondoggles? Etc.

  • Calidissident||

    Tony, the rate may be arbitrary, but we can approximate how much (as % of GDP) the revenue will be. It's not 20-25%. Revenue keeps going up. There shouldn't be a deficit given that fact. That's all I'm saying

  • OldMexican||

    Re: Tony,

    Did an equivalent dollar amount in spending cuts happen?

    Who cares? The fact that my wife continues to rack up credit card spending does not make my current income level a "cost." My cost is still and will always be my next best option forgone. That's independent of income.

    So it looks like we've been incurring the costs, as debt.

    You're incurring in spending. Cost is the best next option forgone, independent of income. You're too easily confised by terms and concepts to be arguing anything.

    What's so wrong with requesting that politicians have the balls to propose cutting programs before they get a tax cut?

    You got me - what's wrong with that?

    However, thievery is still thievery, whether politicians have balls or vaginas.

    And what's so wrong with requesting that politicians propose a revenue stream to pay for such things as multitrillion-dollar wars?

    Again, you got me - what's wrong with that?

    Do you even think we should raise taxes to pay for wars?

    I don't entertain loaded questions. I am against wars from the get go.

    and that's why you're the logical and sane one?

    I am the logical and sane one compared to you, Tony. Maybe that ain't sayin' much, but it is a small comfort I can still hanf my hat on.

  • T o n y||

    You seem to be conflating "cost" and "opportunity cost." Two wars cost money. We paid for them with debt.

    And if I felt I could wish away wars and all other bad things, I could formulate a pretty fabulous utopia in my head too.

    Let's try it again: say the country were invaded by Canada. Would you support raising revenues to pay for fending off the blood-sucking canucks or not?

  • OldMexican||

    Re: Tony,

    You seem to be conflating "cost" and "opportunity cost." Two wars cost money. We paid for them with debt.

    I'm not conflating anything, you nitwit. Cost IS Opportunity Cost in economics. What does it cost buying a house? The next best thing you could have for that money, including the money itself.

    You're thinking of financial cost, which is how much expenditure is needed to finance those wars - or anything else the government wishes to throw money at. The true economic cost of those things is anything else anybody could be doing if that money was still in each other's pockets.

    And if I felt I could wish away wars and all other bad things, I could formulate a pretty fabulous utopia in my head too.


    Whatever rocks your hips, dude. In the meantime, tax cuts are NOT costs.

    Would you support raising revenues to pay for fending off the blood-sucking canucks or not?

    I would not support anything of the sort, either war or thievery.

  • ||

    I was referring to the cost of deficits.

    The financial problems of the biggest mafia-like organization around -- the federal government -- aren't MY problem, except to the extent that they feel they can and will rob me even more in the future.

    It's a problem for those statist fucks, and for those fools who loan money to some of the most irresponsible people on the planet.

  • ||

    Which means that taxation is a totally true zero-sum game

    Taxation is a negative sum game. Knowing that the local thief will come back, again and again, to rob you of all but the bare necessities, will cause rational actors to not work as hard, knowing that they labor for the thief rather than themselves.

    Taxation causes the pie to shrink.

  • ||

    Let's try it again: say the country were invaded by Canada. Would you support raising revenues to pay for fending off the blood-sucking canucks or not?

    1) The Canadians would get their asses kicked.

    2) The Canadian government is roughly as piratical as the U.S. government. Why would I want to voluntarily pay more to prevent replacing one set of thieves with a different set of thieves who were roughly equally bad? How would that benefit me?

  • T o n y||

    They're Canadians. They will enslave you if they don't summarily execute you.

  • Mickey Rat||

    "The preceding scenario makes no sense — except in the bizarro world of government finance."

    That scenario makes no sense because the analogy is strained past the point of failure. Politicians speak in terms cost because they are the equivalent of the shoe store manager, not the customer. The problem with government accountancy are the asinine assumptions that everyone involved is required to act as if they are valid, such as a 20% raise or cut in tax rates (prices) always means a 20% gain or loss in revenues, even if only an idiot would actually buy that. The shoe store manager does not see a price cut as a cost because there is no way he can assume he will ever sell 100% of his stock in a timely fashion at the price he originally asked for.

    There is enough stupidity in how government looks at finance issues to slam the politicos on without having to make crap up.

  • BC||

    I love being lectured about arithmetic by a guy who clings to the belief that government micromanagement of the healthcare industry saves money.

  • T o n y||

    What you're characterizing as government micromanagement of the healthcare industry does save money, by all the numbers-based evidence in the world.

  • MoreFreedom||

    I'd like to thank A. Barton Hinkle for an excellent article examining this "tax cuts cost money" phrasing that seems so popular among big spending statists and their supporters. It is absurd.

    The exception would be if you're a taker with a living provided by government taxing others, then a tax cut means less money for you, which means tax cuts cost you money.

  • bluesky||

    My burden

  • bluesky||

    This will take part of my salary

  • Support Obama888||

    That scenario makes no sense because the analogy is strained past the point of failure. Politicians speak in terms cost because they are the equivalent of cheap nfl jerseys the shoe store manager, not the customer. The problem with government accountancy are the asinine assumptions that everyone involved is required to act as if they are valid, such as a 20% raise or cut in tax rates (prices) always means a 20% gain or loss in revenues

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