May 20, 2006

Saturday Blogged-Out Cubed Sky

Filed under: General — Tom @ 6:15 pm

Cubed Sky

Weekend Question 2B: How Many More Great WSJ Columns Like This One Do We Need?

Filed under: Economy,Taxes & Government — Tom @ 3:16 pm

Question 2A is here.
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Answer — As many as it takes until the budget balances (link requires subscription; HT “S.O.B.er” RedHawk Review):

Their Income Up, U.S. Rich Yield A Tax Windfall
Surging Receipts Prompt Lower Deficit Projections, Debate Over Bush Tax Cuts

WASHINGTON — As America’s rich get richer, the taxes they pay on their increasing income is yielding a windfall for the U.S. Treasury.

The Bush administration and its supporters point to a recent surge in tax receipts as vindication of the 2001 and 2003 tax cuts that critics say favored the wealthy. And even opponents of the tax cuts acknowledge that the surge in unanticipated revenue is coming from the rich.

With wealthy Americans taking an increasing share of total household income and paying a greater share of total taxes, “what we’re seeing is a repeat of the late ’90s, where you get a flood of tax revenues from the hyper-rich,” said Rudolph Penner, a former Congressional Budget Office director now at the Urban Institute think tank. “It may raise some worries socially, but it certainly is good for revenue.”

The Treasury reported last week that tax receipts in April jumped 13.5% from a year earlier to $315.1 billion — much of that increase coming from taxes on investments and other sources of income more important to the wealthy. Receipts from these so-called nonwithheld taxes in April, a month when many tax returns are filed, were up about 17% from a year earlier. (Most Americans have the bulk of their taxes withheld from wages paid through the year.)

Treasury Secretary John Snow, in a speech to the Bond Market Association Friday, said: “The results are in, and they are clear: Economic growth has led to a surge of tax revenues and shrinking deficits. Despite the cries from our critics, it cannot be denied that low taxes truly are consistent with rising federal revenues, which of course help bring the deficit down.”

….. Though the Bush tax cuts mean that the best-off Americans face lower effective tax rates than under President Clinton, they do pay a bigger share of all federal taxes. Data from the CBO and projections by the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution think tanks, show that the top 10% of income earners (with incomes above $251,400) will pay 56.2% of all federal taxes this year, up from 52.2% in 2000. That includes income and payroll taxes, Social Security and the like. The growing tax take from the rich reflects their growing share of the nation’s income. In 2006, the top 10% is projected to receive 44.7% of all household cash income, up from 40.6% in 2000.

There is a BIG hole in that final sentence, which the CBO’s Penner doesn’t understand, and which the liberal critic in the article pounced on, but incorrectly (not excerpted here).

“Household cash income” is “reported” household cash income, and an upward change in the figure is not automatically a “rich getting richer” indicator. And no, I’m not saying that cheating is any more or less rampant than it has been in previous years. What I’m saying, and what experience has shown, is that when capital gains tax rates are lowered, more capital transactions take place, and hence more income (profit on those capital transactions) is reported. So in times of high capital transaction activity, of course you’ll see the share of total income reported by investors making those transactions go up.

These investors aren’t immediately better off than they were before; in fact they’re a little worse off, because of the tax they have to pay. But in the long run, the willingness to take profits in capital transactions usually means that there must be better investment opportunities elsewhere, even after the current tax is paid. The lower rates encourage people to cash in and go where the opportunity is with what remains, leading to more wealth for the investors involved, but also to higher growth for the economy as a whole. Conversely, when cap gains rates are too high, fewer transactions take place, less income is reported, and an economy with huge amounts of locked-in capital does not grow as quickly.

I say “keep the rates low, and let a billion tax-generating, economy-growing transactions bloom.”

Weekend Question 2A: How Many More Great IBD Editorials Like This One Do We Need?

Filed under: Economy,Taxes & Government,TWUQs — Tom @ 3:15 pm

Question 2B is here.
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Answer — Investors Business Daily should churn out as many as they possibly can (HT Club for Growth):

Tax Cuts Have Paid Their Own Way
Posted 5/18/2006

Fiscal Policy: Critics of tax cuts argue that lower rates lead to “losses” of revenue. That’s true if nothing happens after taxes are cut. Which, of course, isn’t the case.

The latest volleys in this fight came this week, as President Bush signed into law legislation extending lower rates on capital gains and dividend incomes through 2010.

The president’s move has been all but written off by many — especially in the media — as a sop to rich supporters who will benefit disproportionately from the tax cuts. They argue the cuts will “cost” the federal government more than they bring in, and make the deficits worse. They also contend that “tax cuts for the rich” today will have to be paid off by working Americans and their children and grandchildren tomorrow.

Sadly, this is what passes for economic argument these days — cheap, ad hominem attacks on the rich, with little scrutiny of both the current reality and history.

Let’s start with the deficit.

Believe it or not, it is shrinking. And fast. This has nothing whatever to do with spending restraint. From 2001 to 2006, overall spending is expected to soar 42%, to nearly $2.7 trillion. Yet, despite that whopping gain, the deficit is getting smaller.

Last year, it was $318 billion, or 2.6% of GDP — after the Office of Management and Budget predicted early in the year that it would reach $423 billion, or 3.6% of GDP. The lower figure was derided at the time as a fluke, a cheap political stunt by Bush’s budget magicians.

Well, this year the deficit is falling again — below $300 billion, recent estimates show. For the record, that will be less than 2.5% of GDP — which is below the 25-year average of 2.7%.

How could this be? In a word: growth. The economy took off after the 2003 tax cuts, creating more revenues than even the spendthrifts in Congress imagined.

….. Fact is, tax cuts do “pay for themselves” — by creating strong new incentives to work, produce and invest that make the economy larger and stronger. Data show this conclusively.

In the 11 quarters following the tax cuts, total real GDP grew $1.15 trillion, or more than 11%. In the 11 quarters before that — a period that included a record drop in stock prices and a series of economy-killing interest-rate hikes by the Federal Reserve — GDP expanded just 7.7%, or $728 billion. Tax cuts did the job, very decisively.

Following the tax cuts, revenues soared nearly 21% from 2003 to 2005. In the three years before that they declined 12%.

….. Add a modicum of federal spending restraint, plus a little entitlement reform, and the budget could easily be put back into surplus within a few years. All it would take is some discipline — and a lot less fear-mongering and distortion by the media.

The reason IBD shouldn’t stop with the editorials is because I want this to continue until the budget is balanced:

IBDCBO0305revs

Then we can talk about cutting taxes some more (:–> ! ), as Australia (“cutting marginal tax burden several years running”) and Hong Kong (second item at link) have consistently done, to impressive effect.
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UPDATE: I needed to add this to respond to the claim that the cuts don’t pay for themselves, from the same article:

According to Congressional Budget Office data, the reduction in the cap-gains rate to 15% was expected to cost the federal government some $27 billion in revenues. But it didn’t happen that way.

In fact, as [Trend] Macrolytics’ Donald Luskin recently pointed out, the tax cuts ended up bringing in $26 billion in added revenues — exactly the opposite of what was predicted.

For those keeping score, that’s a $53 billion swing.

No One Should Be Surprised at the Escalation of the Syrian Crackdown

Filed under: MSM Biz/Other Ignorance,Taxes & Government — Tom @ 12:08 pm

The world’s reaction to the first dissident arrest (HT Weapons of Mass Discussion) was muted.

Surprise — If you ignore it, it doesn’t go away. In fact, it gets worse — Much worse:

Syria moves again to quash dissent
ANOTHER CRACKDOWN: In a campaign that Syrian democracy activists have vowed to fight, police have abducted and detained a human rights lawyer and other activists

AP , DAMASCUS
Friday, May 19, 2006,Page 6

Syrian police arrested the country’s leading rights lawyer and five other activists on Wednesday, bringing to nine the number of people detained this week in what a rights group described as the largest roundup of democracy campaigners in years.

All but one of the nine had signed a petition calling for an improvement in relations with Lebanon.

The lawyer, Anwar al-Bunni, was dragged away from his home by security police, his family said. His brother Akram al-Bunni said that the lawyer was leaving home for an English class late on Wednesday when two men asked him to get into their car.

“Anwar asked them to show him an arrest warrant, but they forced him into the car, and drove away while he was shouting [for help],” Akram said.

The Syrian government has not confirmed the arrests. The authorities almost never issue statements about political detentions, regarding them as security matters.

The head of the National Organization for Human Rights in Syria, Ammar Qurabi, said in a faxed statement that he believed most of the detainees were arrested for signing the petition. Only Khaled Khalifa did not sign the letter, which 500 Syrian and Lebanese intellectuals put their names to last week.

Syria is surely testing whether there will be meaningful objections to any attempt to re-establish its former control over Lebanon. A stronger response than seen thus far is clearly in order, or the heady days of the Cedar Revolution may become a distant memory.

Weekend Question 1: Why Is “Climate Change” Is Such a “Great” Term for Enviros?

Answer: They can shift from global warming to global cooling on a dime without interrupting their efforts to stifle economic development and control people’s lives.

After all, as The Business & Media Institute notes, theories on whether we’ll burn to death or freeze to death change frequently:

Thanks to the release of Al Gore’s latest effort on global warming – this time in book and movie form – climate change is the hot topic in press rooms around the globe. It isn’t the first time.

The media have warned about impending climate doom four different times in the last 100 years. Only they can’t decide if mankind will die from warming or cooling.

As the noise from the controversy has increased, it has drowned out any debate. Journalists have taken advocacy positions, often ignoring climate change skeptics entirely. One CBS reporter even compared skeptics of manmade global warming to Holocaust deniers.

The Society of Environmental Journalists (isn’t that a redundant term? — Ed.) Spring 2006 SEJournal included a now-common media position, arguing against balance. But that sense of certainty ignores the industry’s history of hyping climate change – from cooling to warming, back to cooling and warming once again.

The Media Research Center’s Business & Media Institute (formerly the Free Market Project) conducted an extensive analysis of print media’s climate change coverage back to the late 1800s.

It found that many publications now claiming the world is on the brink of a global warming disaster said the same about an impending ice age – just 30 years ago. Several major ones, including The New York Times, Time magazine and Newsweek, have reported on three or even four different climate shifts since 1895.

“Climate change” also can be used to generate alarms when storms become more frequent, more violent, less frequent, or less violent; when rainfall or snowfall goes up, or goes down; or even when days are more sunny, or less sunny. In other words, it can be twisted into whatever shape is needed any time “weather happens” to give people the impression that the world is falling apart, and that (of course) it’s our fault.

Positivity: “I’ll see her again after 40 years”

Filed under: Positivity — Tom @ 7:15 am

A UK will be reunited with his long-lost daughter after almost 40 years:

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