Gas Tax and Record Profits

[kallsop]

The classic case usually presented as evidence that tax cuts increase revenue is Reagan's tax cut back in 1981. The problem is that federal revenue measured in constant dollars actually decreased after the 1981 tax cuts. It only looks like an increase when you ignore the rather high inflation rate during those years.

Wrong. Second graph under 2. National Budget:

Receipts, Outlays, Surplus and Deficit in Current Dollars (amounts in millions)

Receipts go up, up up, all through the 1980's, adjusted for inflation [it's not monotonic, but 1988 is far ahead of 1980). There is a substantial drop starting when the Clinton recession kicked in just before he left office, but now revenues are higher than ever after the Bush tax cuts.

There is no evidence that we are to the left of the Laffer curve maximum. If anything, the evidence suggests that we are far to the right.

Running a deficit is a different matter, and both Reagan and Bush should have done better there. Reagan at least had a democrat Congress to wrestle with, but Bush has no excuse for most of his two terms.


EDIT - for disambiguity - it's the SECOND graph under section 2. in the link that has been adjusted for inflation.

 

[Dan O.]

Why would the demand for eggs be reduced?

Do you know nothing about the relationship between the price of gas and the price of eggs?

 

[kallsop]

Do you know nothing about the relationship between the price of gas and the price of eggs?

If I ride by bicycle more and increase my appetite, my demand for eggs increases. Yummy, sunny side up.

 

[JEROME DA GNOME]

Do you know nothing about the relationship between the price of gas and the price of eggs?

You think the demand for food will decrease because of an increase in the cost of food?

That sounds nice in economics 101, but in the real world people need to eat.

 

[JEROME DA GNOME]

What percentage of the cost of eggs or other food is fuel related?

I do not know the exact percentage, in fact it is likely a sliding scale. Many food commodities have just about doubled in price recently.

 

[Random]

Wrong. Second graph under 2. National Budget:

Receipts, Outlays, Surplus and Deficit in Current Dollars (amounts in millions)

Receipts go up, up up, all through the 1980's, adjusted for inflation [it's not monotonic, but 1988 is far ahead of 1980). There is a substantial drop starting when the Clinton recession kicked in just before he left office, but now revenues are higher than ever after the Bush tax cuts.

There is no evidence that we are to the left of the Laffer curve maximum. If anything, the evidence suggests that we are far to the right.

Estimated population of the US in 1980: 225,000,000
Estimated population of the US in 2000: 280,000,000
As the population goes up, there are more people who can pay taxes. The more people who can pay taxes, the more taxes get paid. It’s like taking credit for gravity.

The dip in revenue in 2000 also corresponds to the Bush tax cuts, not just the recession. Also, as you may recall, Clinton raised taxes, yet revenue went "up, up, up". The opposite should have happened if we are to the right of the Laffer curve maximum.

Running a deficit is a different matter, and both Reagan and Bush should have done better there. Reagan at least had a democrat Congress to wrestle with, but Bush has no excuse for most of his two terms.

EDIT - for disambiguity - it's the SECOND graph under section 2. in the link that has been adjusted for inflation.

If congress had gone along with the Reagan budgets, the deficit would have been even larger. Reagan wanted more military spending than you can shake a stick at, and in total dollar terms wanted to outspend Tip O’Neal, an impressive feat in and of itself.

 

[Dan O.]

I do not know the exact percentage, in fact it is likely a sliding scale. Many food commodities have just about doubled in price recently.

You now need to develop you alchemy skills if you want to contribute to the economics debate. Find the path that converts gasoline into eggs and then you will know the directions of the economic forces.

 

[KoihimeNakamura]

Incidently, and on a related note.

The thing about food prices are there other factors influencing it. (Such as, I dunno, changing water patterns devastating the Mississippi flood plain. And not growi... this is the wrong forum for this)

But here in WA, most of the gas tax goes to a public transit fund and road repairs fund (which, I must remark, they are very bad at managing) . One that currently serves most major cities. So it /really/ depends on how it's spent.

(Oh, and there's currently an iniative to have it spent on traffic. Pfft.)

 

[GreyICE]

As long as you understand that your eggs will increase in cost as well. Are you willing to pay $20 for a dozen eggs?

The only thing that would cause that is inflation. That wouldn't be the price if we had our entire grid on current-gen solar.

Commodity prices have gone up about 10% I believe. With a doubling in gas prices. I'm good with that ratio.

 

[JEROME DA GNOME]

The only thing that would cause that is inflation. That wouldn't be the price if we had our entire grid on current-gen solar.

Commodity prices have gone up about 10% I believe. With a doubling in gas prices. I'm good with that ratio.

Nope.

Bread, eggs, milk prices up sharply

From 2006 to 2008

Corn: 2.28 to 5.46

Wheat 3.48 to 11.21

 

[JEROME DA GNOME]

You now need to develop you alchemy skills if you want to contribute to the economics debate. Find the path that converts gasoline into eggs and then you will know the directions of the economic forces.

If you do not understand that the cost of producing a product is reflected in its cost than there is no help for you.

 

[Dan O.]

If you do not understand that the cost of producing a product is reflected in its cost than there is no help for you.

I helped myself and found the numbers to calculate the price of eggs related to the changing price of gasoline and posted the result earlier. What have you done besides complain about government and taxes?

 

[JEROME DA GNOME]

What have you done besides complain about government and taxes?

I evidenced the dramatic rise in food prices.


I have done neither of what you are claiming. Please retract.

 

[Dan O.]

I have done neither of what you are claiming. Please retract.

Perhaps I misinterpreted your posts #9: "This is a symptom of Fascism" and #11: "What is the point in presenting other pseudo Fascist States to contrast and compare?"

But besides that I do take it back. You have also jumped to outrageous conclusions like "Are you willing to pay $20 for a dozen eggs?". Do you care to provide your source on the $20/dozen future for eggs or did you just make this up?

 

[Kestrel]

Wrong. Second graph under 2. National Budget:

Receipts, Outlays, Surplus and Deficit in Current Dollars (amounts in millions)

Receipts go up, up up, all through the 1980's, adjusted for inflation [it's not monotonic, but 1988 is far ahead of 1980). There is a substantial drop starting when the Clinton recession kicked in just before he left office, but now revenues are higher than ever after the Bush tax cuts.

There is no evidence that we are to the left of the Laffer curve maximum. If anything, the evidence suggests that we are far to the right.

Running a deficit is a different matter, and both Reagan and Bush should have done better there. Reagan at least had a democrat Congress to wrestle with, but Bush has no excuse for most of his two terms.


EDIT - for disambiguity - it's the SECOND graph under section 2. in the link that has been adjusted for inflation.

Why don't we look at the data instead of a graph?

The chart you referenced doesn't give a source for it's data. However, the Historical Tables for the 2008 Budget of the United States Government has exactly what we need.

Table 1.3 on pages 25 and 26 shows revenue per year in billions of constant year 2000 dollars.

The drop in revenue after the Reagan and G. W. Bush tax cuts is obvious. It takes several years for revenue to recover to the levels before the tax cuts.

1980 1,028.3
1981 1,077.4 <-- Reagan Tax Cut
1982 1,036.9
1983 961.7
1984 1,016.8
1985 1,082.6 <-- Revenue recovers
1986 1,107.3
1987 1,196.1
1988 1,235.6
1989 1,298.9
1990 1,309.4
1991 1,282.6
1992 1,282.7
1993 1,323.2
1994 1,414.0
1995 1,482.4
1996 1,557.9
1997 1,661.2
1998 1,793.1
1999 1,874.9
2000 2,025.5
2001 1,945.9 <-- G.W. Bush Tax Cut
2002 1,777.8
2003 1,665.5
2004 1,707.3
2005 1,888.2
2006 2,037.1 <-- Revenue recovers

 

[Tailgater]

Why don't we look at the data instead of a graph?

The chart you referenced doesn't give a source for it's data. However, the Historical Tables for the 2008 Budget of the United States Government has exactly what we need.

Table 1.3 on pages 25 and 26 shows revenue per year in billions of constant year 2000 dollars.

The drop in revenue after the Reagan and G. W. Bush tax cuts is obvious. It takes several years for revenue to recover to the levels before the tax cuts.

1980 1,028.3
1981 1,077.4 <-- Reagan Tax Cut
1982 1,036.9
1983 961.7
1984 1,016.8
1985 1,082.6 <-- Revenue recovers
1986 1,107.3
1987 1,196.1
1988 1,235.6
1989 1,298.9
1990 1,309.4
1991 1,282.6
1992 1,282.7
1993 1,323.2
1994 1,414.0
1995 1,482.4
1996 1,557.9
1997 1,661.2
1998 1,793.1
1999 1,874.9
2000 2,025.5
2001 1,945.9 <-- G.W. Bush Tax Cut
2002 1,777.8
2003 1,665.5
2004 1,707.3
2005 1,888.2
2006 2,037.1 <-- Revenue recovers

And what else was going on during those times? What other economic events were going on during those years? Recovery from the late 70s?Inflation? Recession? Bubbles bursting? Buildings falling? Unemployment? Who was sharing the heaviest burden of those taxes? What major events might have caused future tax exemptions or deductions for years after skewing the actual results in those tables? etc.

Directly relating income to tax cuts or increases is very simplistic.

 

[GreyICE]

Nope.

Bread, eggs, milk prices up sharply

From 2006 to 2008

Corn: 2.28 to 5.46

Wheat 3.48 to 11.21

The CPI for food and beverages for 2007-2008 says 4.4%. The CPI for 2007 was 4.8%. I can't help but thinking we're cherry picking data to get the result you want to get here.

http://www.bls.gov/news.release/cpi.nr0.htm

 

[Kestrel]

And what else was going on during those times? What other economic events were going on during those years? Recovery from the late 70s?Inflation? Recession? Bubbles bursting? Buildings falling? Unemployment? Who was sharing the heaviest burden of those taxes? What major events might have caused future tax exemptions or deductions for years after skewing the actual results in those tables? etc.

Directly relating income to tax cuts or increases is very simplistic.

An earlier poster claimed that dropping tax rates would increase tax revenues and the history had proven him correct. I just presented data that proved this poster was incorrect and that the two major cuts in tax rates in recent years were directly followed by a clear drop in tax revenue.

If you wish to make a case that the real cause of these revenue drops was something besides the obvious cause of changing tax rates, feel free to present your evidence.

Just claiming that it's too complex to understand is not a valid argument.

 

[Tailgater]

An earlier poster claimed that dropping tax rates would increase tax revenues and the history had proven him correct. I just presented data that proved this poster was incorrect and that the two major cuts in tax rates in recent years were directly followed by a clear drop in tax revenue.

If you wish to make a case that the real cause of these revenue drops was something besides the obvious cause of changing tax rates, feel free to present your evidence.

Just claiming that it's too complex to understand is not a valid argument.

Well, I dont have a ton of time atm, but here is a basic start.

http://en.wikipedia.org/wiki/List_of_recessions

notice this also covers the dip in 90-91

 

[JEROME DA GNOME]

The CPI for food and beverages for 2007-2008 says 4.4%. The CPI for 2007 was 4.8%. I can't help but thinking we're cherry picking data to get the result you want to get here.

http://www.bls.gov/news.release/cpi.nr0.htm

Now if you understood what the CPI is your link might be relevant.

Here is some updated information for you to digest.

http://online.wsj.com/article/SB120881517227532621.html

Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year.

And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.

http://www.breitbart.com/article.php?id=080424190924.hb977n7e&show_article=1

The price of certain types of rice rose by 50 percent in recent months, causing tension in the poorest parts of the world.

The high price of rice sparked violent protests in Haiti earlier this month, forcing the government to issue an order to lower prices. In the Philippines, the army distributed rice in impoverished neighborhoods to prevent tension.