Here is the Republican/Tea Party position:
We’d like to have the US Government receive higher tax revenues. The best way to achieve this, as has been shown historically and practiced by Presidents from Kennedy to Clinton, is to lower the tax RATE. This will stimulate the economy, increase hiring, and benefit all. But overall, spending must be contained and serious cuts made, because spending has outpaced even strong revenue growth, resulting in no revenue surplus (in good economic times or bad) since President Eisenhower more than half a century ago.
Here is the Democrat/Socialist position, derived from their own statements:
We think that, at some point, you’ve made enough money. We are willing to reduce the government’s tax REVENUE because we want to increase the RATE “in the interest of fairness.” (For this transcript from Obama, see here.) And we believe that a reduction from a large future gain in spending to a smaller one should count as a “cut.” And that a reduction to the spending levels of even 2008 is absolutely unconscionable.
The key here is that higher tax RATES have not historically produced higher revenues, and have tended to REDUCE revenues as they have reduced the economy. The lag time can be from zero to three years depending on how the tax rule changes are structured.
Note that some tax increases produce an immediate, short-term revenue blip as people that can do so move from a future activity to a current one. In other words, they sell assets or do other things before the tax rate changes. This is not a true economic boost, because the net effect is an overall loss of revenue.
It is foolish to say tax “cuts” cost revenue, and in fact the US Office of Management and Budget consistently underestimated the revenue from the Bush rate reductions by hundreds of billions of dollars, back when our entire deficit was measured in hundreds of billions of dollars.
The left’s position here is actually self-destructive. They would reduce their own revenue AND harm the business economy of the US in the interest of “fairness” — making everyone miserable.
===|==============/ Keith DeHavelle