tag:blogger.com,1999:blog-7289281.post5429965253477609342..comments2023-10-10T07:28:24.854-06:00Comments on Muellerstuff: A History of the Rest of my Declining Years: It Just Finally Dawned On MeKen & Carolhttp://www.blogger.com/profile/15383980311952310145noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-7289281.post-2807645060466601752011-07-03T14:47:42.717-06:002011-07-03T14:47:42.717-06:00Thanks Chris for the comment. Not only in theory b...Thanks Chris for the comment. Not only in theory but in practice too. E.g. early 60s and then in the 80s. Of course, dealing with deficits you have to take into account the spending as well as the revenue.<br /><br />Venture capital: would that capture the guy on main street who hires a couple extra folks? I think that is an important part of the whole deal.<br /><br />I agree things didn't work out so great with Bush. I guess we need to keep those other factors equal. Hard to do in a relatively free society. Perhaps the current administration will eventually be able to fix this last problem.Ken & Carolhttps://www.blogger.com/profile/15383980311952310145noreply@blogger.comtag:blogger.com,1999:blog-7289281.post-25652958255577082212011-07-02T21:02:47.655-06:002011-07-02T21:02:47.655-06:00It sounds good in theory. Lowering tax rates prov...It sounds good in theory. Lowering tax rates provides a business owner with more capital to expand his or her business. That expansion results in more taxable income, which in turn yields more tax revenue, even at the reduced rate of taxation. This has been the Republican mantra for many years.<br /><br />But, in the real world, is this theory testable? Price Waterhouse Cooper has a graphic of overall venture capital investments from Q1-1995 to Q1-2011, available here:<br /><br />https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=historical<br /><br />Note, especially after the Bush tax cuts of 2001, investments actually went DOWN - way down - exactly the OPPOSITE of what you would expect if the lower taxes (on higher income taxpayers) would equal increased capital investment. Note also that the second round of tax cuts in 2003, also designed to spur investment, had virtually no effect on venture capital investments whatsoever.<br /><br />So, where was the money going? First, real estate appreciation, which had been rising at relatively modest rates up to the year 2001, really began to take off. This indicates investors were pumping huge amounts of cash into real estate. Second, the trade deficit balooned from 376 billion in 2001 to a historic record of an incredible 753 billion in 2006(Figures available here:http://www.census.gov/foreign-trade/statistics/historical/gands.txt).<br /><br />What this boils down to is that the Bush tax cuts of 2001 and 03 had pretty much the OPPOSITE effect of that which was intended. <br /><br />Investors on the one hand were able to contribute more capital to the real estate bubble - which in time not only went up in smoke, but also helped bring on a severe recession. This in turn had additional negative consequences for revenue. At the same time, on the other hand, the trade deficit actually doubled in a mere 5 years.<br /><br />Thus, if the Bush tax cuts had never occurred, the American economy would have actually been better off. And not only that, but there's a good chance we would have seen a budget surplus during each of the Bush years.Chrishttps://www.blogger.com/profile/02107206395412209448noreply@blogger.com