Category Archives: tax revenues

Media Myth That Cutting Taxes Boosts Revenue Revived For 2012

Media Matters has a terrific post about the myth that tax cuts generate revenues and that bigger tax cuts generate larger revenues.

Media Matters shows how these claims are debunked by not only by those on the Left, like Paul Krugman but also by those on the Right, who actually proposed the claim and sold it to Ronald Reagan and George w. Bush.

Martin Feldstein, a Harvard economist who was the first chairman of President Reagan’s Council of Economic Advisers estimated that a 10 percent tax cut would in fact reduce tax revenue — but only by 3 to 5 percent.

“It is not that you get more revenue by lowering tax rates, it is that you don’t lose as much,” he said. [The New York Times, 3/26/08]


Read … Here

This post I think ties in nicely with the last post from NJPP about what our tax dollars actually pay for.

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Filed under Martin Feldstein, Media Matters, media myth, New Jersey Policy Perspective, Paul Krugman, President George W. Bush, Ronald Reagan, supply side economics, tax cuts, tax revenues

Cut And Grow Fail: CBO Schools Tea Party Freshman In Basic Economics

This little ditty was posted Friday on Talking Points Memo. It should be a wake-up call to all those TEA partiers and other right-wingers out there that think that all will be fine in the world if we only cut spending and do nothing to increase revenue.

Unfortunately though, regardless of economic schooling provided by the CBO, there will those that continue to burry their heads in the sand and refuse to believe anything a socialist government agency has to say:

Rep. Tim Huelskamp (R-KS), a Tea Party-backed freshman who voted against the final debt limit bill, recently asked to hear from the Congressional Budget Office about the impact of government spending on economic growth. It’s an article of faith on the right that vastly shrinking government will unleash the forces of private enterprise, and faced with CBO’s opposing view, Huelskamp wanted to know the answer to two questions:

1). What current federal departments, agencies, programs, or portions thereof do not contribute to economic growth?

2). In the programs that CBO believes do contribute to economic growth, what level of spending cuts would amount to a level you believe would be significant enough to “probably slow the economic recovery”?

But if the newly elected member of the Budget Committee was hoping the non-partisan CBO would buy into his premise, he’ll be sorely disappointed.

In a response letter Thursday, CBO-chief Doug Elmendorf gives Huelskamp a layman’s lesson in Keynesian economics: Under current economic circumstances, new federal spending would help economic growth, and current and future cuts could stymie it, particularly if they hit key government investment.

“When demand for goods and services falls short of the economy’s ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy’s actual and potential levels of output,” Elmendorf writes.

The precise details matter. The more robust the economy, the lower the impact. But, according to Elmendorf, “when the Federal Reserve’s ability to lower short-run interest rates is constrained because those rates are already near zero, as they are currently, the short-run effects of changes in government spending on output tend to be larger than usual.”

To illustrate the point, Elmendorf notes that deficit reduction measures that cut spending by $100 billion next fiscal year, and hundreds of billions more over the coming decade “would decrease real (inflation-adjusted) gross national product (GNP) in 2012, 2013, and 2014 by amounts ranging from roughly 0.1 percent to 0.6 percent depending on the year and the assumptions used.” In other words, the GOP’s current governing theory is damaging the economy and, by implication, costing jobs. And for those Republicans who want to cut more, ” a reduction in primary deficits that followed the same gradual time path but was twice as large would produce macroeconomic effects that were roughly twice as large.”

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There are important growth-related reasons to reduce deficits if and when the economy improves — it reduces the extent to which government spending “crowds out” private investment, by undertaking functions the private sector can do more efficiently. But we’re not there yet and, according to CBO, won’t be until the end of the decade. Spending cuts like the ones describe above, “[a]t the turn of the decade, from 2019 through 2021…would increase [GNP] by roughly 0.5 percent to 1.4 percent.”

But again the specifics matter, and if the GOP wants to slash across the board, they’ll do damage anyhow.

“Some types of spending, such as funding for improvements to roads and highways, may add to the economy’s potential output in much the same way that private capital investment does,” Elmendorf writes. “Other policies, such as funding for grants to increase access to college education may raise long-term productivity by enhancing people’s skills. The positive longer-term impact of deficit reduction on GNP would be smaller if the policies that reduced deficits included cuts in productive government investments.”

Huelskamp’s original letter is here. Read Elmendorf’s response here.

The letters stem from the below exchange between Huelskamp and Elmendorf at a recent Budget committee hearing. Elmendorf and Huelskamp are arguing two different points. Huelskamp would like to see big cuts to federal safety net programs and other spending. Elmendorf argues that while the macroeconomic consequences of slashing some of those programs might be minimal in the long run, the near-term impact would be significant, given the current downturn.

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Filed under Congressional Budget Office, debt deal, economy, government spending, job growth, Talking Points Memo, tax cuts, tax revenues, Tea Party

Jon Stewart: Dealageddon! – A Compromise Without Revenues

The debt ceiling debate ends in a budget deal that raises the debt limit and includes trillions in spending cuts but has no revenue increases.

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
Dealageddon! – A Compromise Without Revenues
www.thedailyshow.com
http://media.mtvnservices.com/mgid:cms:item:comedycentral.com:393592
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Filed under compromise, Dealageddon, debt ceiling, Jon Stewart, President Obama, tax revenues, The Daily Show

>As A Matter Of Fact…New Jersey revenue projections

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May 17th, 2011 | Published in NJPP Blog: As a Matter of Fact …

New Jersey Policy Perspective president Deborah Howlett made the following statement about revenue projections presented today to the Assembly Budget Committee by the Office of Legislative Services:

While it’s great to hear that New Jersey tax revenues seem to have bottomed out and are beginning to climb, the state remains stuck in a very deep hole.

The Office of Legislative Services projects that revenues will approach $29.9 billion next year, an increase of $1.17billion over its current year estimates. However, even with that growth, the state’s revenue collections would still be $3.4 billion less than was collected in FY2008, the year prior to the recession. Almost all of the increase is driven by higher income tax collections fueled by the rebound on Wall Street. Revenues from sales, corporate business and other taxes are still below estimates.

The state must choose to invest these revenues wisely, using the money to restore the devastating cuts made to services and to pay into the state pension system. The money should not be used, as the governor suggested was his goal during his budget address in February, to fuel $2.5 billion in corporate tax breaks over the next five years. He’s already used $1 billion in future tax revenues to subsidize corporations and business since taking office. Those efforts have contributed to the state’s lackluster corporate tax revenue collections and have failed to create quality jobs. It’s time to abandon old, tired trickle down economic theory and embrace the reality that creating a strong, vibrant economy and attracting good, solid middle class jobs requires great schools, safe streets and the high quality of living New Jersey attained before the recession.

While the increase in revenue is welcome news, New Jersey still has far to go before it is made whole again.

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Filed under corporate tax breaks, Gov. Chris Christie, Millionaire'sTax, New Jersey, New Jersey Policy Perspective, State budget, tax revenues, tax subsidies

Hold Onto Your Wallets, Middletown To Introduce Budget That Includes a 12.2% Tax Increase


Hold onto your purse strings and wallets ladies and gentleman, I got my hands on the proposed 2010 Middletown Municipal Budget before its introduction and as we have been saying for a long time now, it isn’t pretty!

The budget that will be introduced during the Special Budget Introduction Meeting tonight at 7pm will total nearly $65M and will reflect a spending increase over last years budget of 4.9%, it calls for a 12.2% tax increase that will raise $5.55M to fund it!

As I said it isn’t pretty, I spent a few hours reviewing it after I requested a copy of it from Committeeman Sean Byrnes, who was nice enough to forward it to me in advance of the budget meeting. In the email that accompanied the budget Byrnes wrote:
“…much of this was foreseeable, pension increase $1.8M, payback $800k from 2009, salary increases $1.5M, health care increase $1.6M, these total over $6.0M. No surprise. We knew this in 2009 and yet they refused all my recommendations including fixed fee legal retainer, bidding out engineering work, cutting Middletown matters, cutting Middletown day, contracting out leaf and brush, consolidating maintenance and refusing finance cmte. Even now we should be assuming the governors tool chest will pass and we should be planning accordingly…”

Why the big increase, what are the driving forces behind the budget? In addition to what Sean Byrnes stated, nearly every appropriation line item in the budget saw an increase of some kind even though most revenues streams dried up.
Not surprisingly, after the mayor took such a public stance against the MTEA after April’s defeat of the school budget, taking his lead from Governor Christie and insisting that the teachers accept a wage freeze and contribute to their health benefits, the largest overall increase in the budget after the increase to the health and pension funds were Salaries and Wages paid out to employees who will enjoy an 8.9% increase over last year!
If you doubt what I say, you can print out a copy for yourself >>> Here and see for yourself.
If you plan on attending the budget introduction meeting bring a copy of the budget with you, along with your questions in order to ask the mayor why he and others on the Township Committee have done such a poor job in preparing for and planning this budget. If they would have heeded Sean Byrnes and former Committeeman Patrick Short’s advice over the past year and leading up to the introduction of this budget, the situation we find ourselves in today may not have been so costly to residents.

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Filed under budget deficit, Budget Shortfall, Middletown Township, Patrick Short, Sean F. Byrnes, special budget meeting, tax increase, tax revenues

Video:Roberts, Watson Coleman & Greenwald on Better-Than-Expected Tax Amnesty Revenue Figures

In this video press release, Assembly Speaker Joseph J. Roberts, Jr. (D-Camden), Assembly Majority Leader Bonnie Watson Coleman (D-Mercer) and Assembly Budget Committee Chairman Louis D. Greenwald (D-Camden) discuss Governor Jon S. Corzine’s announcement that the state’s tax amnesty program has exceeded revenue projections.

According to numbers from the state Department of Treasury, the program has collected more than $600 million – $400 million over initial projections – and represents the largest single tax amnesty program executed by any state.

The Democratic leaders said they are committed to using the money for property tax relief.

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Filed under Governor Corzine, homestead rebates, New Jersey, NJ Assembly Dems, property taxes, tax amnesty, tax revenues