dott.Piergiorgio wrote:
Dan ha scritto:
Recall the Reagan tax cuts followed by increases in federal
revenue followed by a spending orgy by the Congress?)

Someone can explain to me the contradictory justapoxition of "tax cuts"
and "increases in federal revenue" ?

Best regards from Italy,
Dott. Piergiorgio.

Well, with any change in the tax codes, people with large stakes of
sedentary investments are encouraged to shift them around. basically, a
tax cut on investments acts as a moratorium/amnesty: we'll forgive you
if you pay us. If rates are 50% and you have $1 million in profits, you
might be enticed to sell those assets if you lower the rate to 25% (for
an almost instantaneous gain of 25% on those assets).

Conversely, if rates are low, and you hold a gain, if the government
raises rates, then you are enticed to sell NOW to lock in the lower rate.

Such activities create a bunch of secondary profits (markets, brokers,
managers who manage the "new" money), so it looks, temporarily, that the
economy has grown when all that was done was to pass paper around. The
government take from this new activity is very short term, but the
tax-cutters point to it as proof that lowering taxes generates
additional revenue (failing to mention that the increases are temporary,
at best).

Please to note that the "spending orgy by the congress" was, in fact,
not an increase in spending independent from the tax cuts, but was a
part of them. Note also that Reagan never submitted a budget that was
ever even close to what was passed in Congress - Congressional budgets
were always WAY lower than Reagan wanted. Note also that Reagan gets
credit for the tax cuts (passed by Congress) but no blame for the
spending, which increases were mostly his bloated military boondoggles,
which EVEN the Pentagon stated openly were obscenely more than they
needed or wanted...

Acolytes of St. Ronnie are an interesting breed... Like other religious
fanatics, they ignore the facts to maintain their belief in the
canonical infallibility of their cult leader.

Dan