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July 17, 2009 at 10:04 AM #433219July 17, 2009 at 10:22 AM #432521
SK in CV
Participant[quote=EconProf]SK: When tax rates change it takes a while for the actors in the economy to change their behavior, then the hiring, investing, building etc. to increase or decrease, then output and incomes to change, then the tax revenues approaching the following year’s tax deadline of April 15 to change. These time lags are why it is difficult to ascribe a change in government revenues to an earlier change in the tax rate. And that’s why I gave you the six-year result after the tax rates were changed under Kennedy and then Reagan.[/quote]
I don’t disagree with you at all on this. I don’t know that it’s 6 years. It may be 4, it may be 10. But given that there are so many other variables affecting the cyclical economy (we’ve had 7 recessions in the last 40 years, roughly 1 every 6 years on average, ranging from 2 quarters to the current recession, which is likely to last 8 or 9 quarters), I’m still looking for compelling evidence that tax cuts are stimulative to government revenues, or that tax increases are depressive. There is none that i’ve found, either way.
July 17, 2009 at 10:22 AM #432734Participant[quote=EconProf]SK: When tax rates change it takes a while for the actors in the economy to change their behavior, then the hiring, investing, building etc. to increase or decrease, then output and incomes to change, then the tax revenues approaching the following year’s tax deadline of April 15 to change. These time lags are why it is difficult to ascribe a change in government revenues to an earlier change in the tax rate. And that’s why I gave you the six-year result after the tax rates were changed under Kennedy and then Reagan.[/quote]
I don’t disagree with you at all on this. I don’t know that it’s 6 years. It may be 4, it may be 10. But given that there are so many other variables affecting the cyclical economy (we’ve had 7 recessions in the last 40 years, roughly 1 every 6 years on average, ranging from 2 quarters to the current recession, which is likely to last 8 or 9 quarters), I’m still looking for compelling evidence that tax cuts are stimulative to government revenues, or that tax increases are depressive. There is none that i’ve found, either way.
July 17, 2009 at 10:22 AM #433034Participant[quote=EconProf]SK: When tax rates change it takes a while for the actors in the economy to change their behavior, then the hiring, investing, building etc. to increase or decrease, then output and incomes to change, then the tax revenues approaching the following year’s tax deadline of April 15 to change. These time lags are why it is difficult to ascribe a change in government revenues to an earlier change in the tax rate. And that’s why I gave you the six-year result after the tax rates were changed under Kennedy and then Reagan.[/quote]
I don’t disagree with you at all on this. I don’t know that it’s 6 years. It may be 4, it may be 10. But given that there are so many other variables affecting the cyclical economy (we’ve had 7 recessions in the last 40 years, roughly 1 every 6 years on average, ranging from 2 quarters to the current recession, which is likely to last 8 or 9 quarters), I’m still looking for compelling evidence that tax cuts are stimulative to government revenues, or that tax increases are depressive. There is none that i’ve found, either way.
July 17, 2009 at 10:22 AM #433105Participant[quote=EconProf]SK: When tax rates change it takes a while for the actors in the economy to change their behavior, then the hiring, investing, building etc. to increase or decrease, then output and incomes to change, then the tax revenues approaching the following year’s tax deadline of April 15 to change. These time lags are why it is difficult to ascribe a change in government revenues to an earlier change in the tax rate. And that’s why I gave you the six-year result after the tax rates were changed under Kennedy and then Reagan.[/quote]
I don’t disagree with you at all on this. I don’t know that it’s 6 years. It may be 4, it may be 10. But given that there are so many other variables affecting the cyclical economy (we’ve had 7 recessions in the last 40 years, roughly 1 every 6 years on average, ranging from 2 quarters to the current recession, which is likely to last 8 or 9 quarters), I’m still looking for compelling evidence that tax cuts are stimulative to government revenues, or that tax increases are depressive. There is none that i’ve found, either way.
July 17, 2009 at 10:22 AM #433268Participant[quote=EconProf]SK: When tax rates change it takes a while for the actors in the economy to change their behavior, then the hiring, investing, building etc. to increase or decrease, then output and incomes to change, then the tax revenues approaching the following year’s tax deadline of April 15 to change. These time lags are why it is difficult to ascribe a change in government revenues to an earlier change in the tax rate. And that’s why I gave you the six-year result after the tax rates were changed under Kennedy and then Reagan.[/quote]
I don’t disagree with you at all on this. I don’t know that it’s 6 years. It may be 4, it may be 10. But given that there are so many other variables affecting the cyclical economy (we’ve had 7 recessions in the last 40 years, roughly 1 every 6 years on average, ranging from 2 quarters to the current recession, which is likely to last 8 or 9 quarters), I’m still looking for compelling evidence that tax cuts are stimulative to government revenues, or that tax increases are depressive. There is none that i’ve found, either way.
July 17, 2009 at 10:46 AM #432540EconProf
ParticipantYou are correct that a lot of factors are always at work in determining the economy’s fate and thus tax revenues than just tax rates. For example, the late 1960s economy was boosted by the Vietnam War ramp up of government spending, so it wasn’t just the Kennedy tax cut.
Generalizations in economics are always prefaced with the term ceteris paribus, or “other things remaining equal”. In analyzing empirical results, of course, those other things are always dancing around, making for endless debate in faculty lounges and insuring full employment for us economists.
The subject of time lags is fascinating to me since I did a lot of research on it in graduate school. It is sadly underappreciated by journalists and politicians and we are now paying the price. For example, the stimulus bill totaling some 3/4 $trillion last winter is only about 10% spent, according to recent news reports. I knew this would happen when they passed it and the advocates made extravagent promises about how quickly and powerfully it would help the economy and create jobs. It is entirely possible that the stimulus will have its biggest effect just when the economy is recovering on its own. The ramp up in government programs designed to be countercyclical would end up being procyclical, adding to inflation.
But then, maybe that’s the idea…July 17, 2009 at 10:46 AM #432754ParticipantYou are correct that a lot of factors are always at work in determining the economy’s fate and thus tax revenues than just tax rates. For example, the late 1960s economy was boosted by the Vietnam War ramp up of government spending, so it wasn’t just the Kennedy tax cut.
Generalizations in economics are always prefaced with the term ceteris paribus, or “other things remaining equal”. In analyzing empirical results, of course, those other things are always dancing around, making for endless debate in faculty lounges and insuring full employment for us economists.
The subject of time lags is fascinating to me since I did a lot of research on it in graduate school. It is sadly underappreciated by journalists and politicians and we are now paying the price. For example, the stimulus bill totaling some 3/4 $trillion last winter is only about 10% spent, according to recent news reports. I knew this would happen when they passed it and the advocates made extravagent promises about how quickly and powerfully it would help the economy and create jobs. It is entirely possible that the stimulus will have its biggest effect just when the economy is recovering on its own. The ramp up in government programs designed to be countercyclical would end up being procyclical, adding to inflation.
But then, maybe that’s the idea…July 17, 2009 at 10:46 AM #433054ParticipantYou are correct that a lot of factors are always at work in determining the economy’s fate and thus tax revenues than just tax rates. For example, the late 1960s economy was boosted by the Vietnam War ramp up of government spending, so it wasn’t just the Kennedy tax cut.
Generalizations in economics are always prefaced with the term ceteris paribus, or “other things remaining equal”. In analyzing empirical results, of course, those other things are always dancing around, making for endless debate in faculty lounges and insuring full employment for us economists.
The subject of time lags is fascinating to me since I did a lot of research on it in graduate school. It is sadly underappreciated by journalists and politicians and we are now paying the price. For example, the stimulus bill totaling some 3/4 $trillion last winter is only about 10% spent, according to recent news reports. I knew this would happen when they passed it and the advocates made extravagent promises about how quickly and powerfully it would help the economy and create jobs. It is entirely possible that the stimulus will have its biggest effect just when the economy is recovering on its own. The ramp up in government programs designed to be countercyclical would end up being procyclical, adding to inflation.
But then, maybe that’s the idea…July 17, 2009 at 10:46 AM #433125ParticipantYou are correct that a lot of factors are always at work in determining the economy’s fate and thus tax revenues than just tax rates. For example, the late 1960s economy was boosted by the Vietnam War ramp up of government spending, so it wasn’t just the Kennedy tax cut.
Generalizations in economics are always prefaced with the term ceteris paribus, or “other things remaining equal”. In analyzing empirical results, of course, those other things are always dancing around, making for endless debate in faculty lounges and insuring full employment for us economists.
The subject of time lags is fascinating to me since I did a lot of research on it in graduate school. It is sadly underappreciated by journalists and politicians and we are now paying the price. For example, the stimulus bill totaling some 3/4 $trillion last winter is only about 10% spent, according to recent news reports. I knew this would happen when they passed it and the advocates made extravagent promises about how quickly and powerfully it would help the economy and create jobs. It is entirely possible that the stimulus will have its biggest effect just when the economy is recovering on its own. The ramp up in government programs designed to be countercyclical would end up being procyclical, adding to inflation.
But then, maybe that’s the idea…July 17, 2009 at 10:46 AM #433286ParticipantYou are correct that a lot of factors are always at work in determining the economy’s fate and thus tax revenues than just tax rates. For example, the late 1960s economy was boosted by the Vietnam War ramp up of government spending, so it wasn’t just the Kennedy tax cut.
Generalizations in economics are always prefaced with the term ceteris paribus, or “other things remaining equal”. In analyzing empirical results, of course, those other things are always dancing around, making for endless debate in faculty lounges and insuring full employment for us economists.
The subject of time lags is fascinating to me since I did a lot of research on it in graduate school. It is sadly underappreciated by journalists and politicians and we are now paying the price. For example, the stimulus bill totaling some 3/4 $trillion last winter is only about 10% spent, according to recent news reports. I knew this would happen when they passed it and the advocates made extravagent promises about how quickly and powerfully it would help the economy and create jobs. It is entirely possible that the stimulus will have its biggest effect just when the economy is recovering on its own. The ramp up in government programs designed to be countercyclical would end up being procyclical, adding to inflation.
But then, maybe that’s the idea…July 17, 2009 at 11:47 AM #432568Veritas
ParticipantI am sure the stimulus will create jobs: government jobs managing all the companies they take over and try to run.
July 17, 2009 at 11:47 AM #432784ParticipantI am sure the stimulus will create jobs: government jobs managing all the companies they take over and try to run.
July 17, 2009 at 11:47 AM #433084ParticipantI am sure the stimulus will create jobs: government jobs managing all the companies they take over and try to run.
July 17, 2009 at 11:47 AM #433155ParticipantI am sure the stimulus will create jobs: government jobs managing all the companies they take over and try to run.
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