tag:blogger.com,1999:blog-6616959642391988608.post4804587367312064252..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Raising tax rates doesn't guarantee more revenuesScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-6616959642391988608.post-73602457460836586372009-02-28T10:59:00.000-08:002009-02-28T10:59:00.000-08:00Mark: The only good thing about the capital gains ...Mark: The only good thing about the capital gains tax is that it can be legally avoided by not selling the appreciated asset. Showing capgains realizations (i.e., decisions to sell realized gains) thus tells us exactly how much people's behavior was affected by changes in the capgains rate. Realizations change by an order of magnitude more than the rate did in the chart, so revenues must have Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-52911516790684189712009-02-28T04:42:00.000-08:002009-02-28T04:42:00.000-08:00Rates were cut, revenue rose -- period. In 1980, ...Rates were cut, revenue rose -- period. In 1980, at higher rates, federal receipts were $244 billion. In 1988, they were $446 billion. And there was a recession the first few years of the '80s, a big one by current standards.<BR/><BR/>Even Clinton's Council of Economic Advisers in 1994 agreed with the basic proposition under discussion here, with direct reference to ERTA: "It is undeniable Jon S.https://www.blogger.com/profile/14840074248344452572noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-37362857940365677282009-02-27T16:36:00.000-08:002009-02-27T16:36:00.000-08:00As I was in active tax practice during all of thos...As I was in active tax practice during all of those years I have personal anecdotal observations that a reduction in capital gain rates did stimulate more property with gains being sold. I consider a 'realized capital gain' as revenue. The capital gains I encountered in practice were more often real estate related than securities related although I encountered all kinds.Gene Prescotthttps://www.blogger.com/profile/01749854994321888028noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-5507479538209584652009-02-27T15:45:00.000-08:002009-02-27T15:45:00.000-08:00Don't confuse TEFRA with the Economic Recovery Tax...Don't confuse TEFRA with the Economic Recovery Tax Act (ERTA) of 1981 (otherwise known as the Kemp-Roth Tax Cut) which reduced the top marginal tax rate on unearned income from 70% to 50% and also reduced the top capital gains tax rate from 28% to 20%.<BR/><BR/>P.S. Bill Roth was my Senator.Mark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-9445581367031954072009-02-27T15:31:00.000-08:002009-02-27T15:31:00.000-08:00Scott,First, realized capital gains are not the sa...Scott,<BR/>First, realized capital gains are not the same as revenue from capital gains taxes. And I think the whole point the graph was supposedly making (which it clearly failed to do) was that capital gains tax increases fail to increase tax revenue (show me where revenue is shown on the graph).<BR/>Second, the massive tax increase (the largest in history) ennacted under Reagan was the the TaxMark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-32886312959318581232009-02-27T14:52:00.000-08:002009-02-27T14:52:00.000-08:00Mark, I don't know what you're doing with the data...Mark, I don't know what you're doing with the data, but my chart does show realized capgains as a % of GDP and they bear no relation to your numbers. <BR/><BR/>Maybe I'm cross-eyed, but the Forbes article says Reagan proposed a huge tax increase in 1983. In fact it was a huge tax cut, taking the top marginal rate down from 70% to 35%. The economy subsequently boomed. <BR/><BR/>On that score, I Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-41289096337202972092009-02-27T12:25:00.000-08:002009-02-27T12:25:00.000-08:00I should also mention that the effective capital g...I should also mention that the effective capital gains rate averaged 22.6% during 1987-2000 and 16% the rest of the period from 1978 through 2005. So revenues as a percent of GDP averaged 30% higher when the effective tax rate was 41.3% higher. This of course suggests that there are decreasing margins of returns with tax increases (consistent with theory), but it also suggests that we have been Mark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-45557431078583605402009-02-27T12:00:00.000-08:002009-02-27T12:00:00.000-08:00Scott,The Tax Foundation's data is a little off. I...Scott,<BR/><BR/>The Tax Foundation's data is a little off. I prefer to use data from the following two nonpartisan sources:<BR/><BR/>http://www.gpoaccess.gov/usbudget<BR/>/fy09/pdf/hist.pdf<BR/><BR/>http://www.treas.gov/offices<BR/>/tax-policy/library<BR/>/capgain1-2008.pdf<BR/><BR/>One of the problems with the chart is that it makes a mention of tax revenues but they don't appear anywhere on theMark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-34457569843872456882009-02-27T04:21:00.000-08:002009-02-27T04:21:00.000-08:00Great chart, Scott. I wish I could say that maybe...Great chart, Scott. I wish I could say that maybe some people in the halls of Congress will see this and have second thoughts, but the chance of that happening are zero. <BR/><BR/>Maybe Kudlow will talk about this chart on CNBC -- and speaking of which, with the exception of Larry and only a few others, the cluelessness of most CNBC commentators and guests is mind-boggling. Lots of expertise Jon S.https://www.blogger.com/profile/14840074248344452572noreply@blogger.com