Hume furthered capital gains tax assertion disputed by economists
SUMMARY: In criticizing Sen. Barack Obama's "mindset about taxes," Fox News' Brit Hume said that "when you've lowered [capital gains tax rates] in the past, you get a gusher of revenue, because people go ahead and take their capital gains and the revenues go up." However, in suggesting that cuts in the capital gains tax result in greater revenue, Hume did not note that many economists have challenged the idea that tax revenue increases over the long term as a result of cuts in the capital gains tax rate.
On the October 19 edition of Fox News Sunday, Fox News Washington bureau chief Brit Hume said of Sen. Barack Obama's "mindset about taxes": "He earlier gave us a glimpse of that in the interview he did with [ABC World News anchor Charles] Gibson when he was talking about raising capital gains tax rates. And Charlie pointed out to him that, you know, when you've lowered them in the past, you get a gusher of revenue, because people go ahead and take their capital gains and the revenues go up. And Obama said, yes, perhaps, but, he said, he wanted to do it anyway because it was fairer." Hume appeared to be referring to Gibson's assertion, during the April 16 Democratic presidential debate, that "history shows that when you drop the capital gains tax, the revenues go up." But in suggesting that cuts in the capital gains tax result in greater revenue, Hume did not note that many economists -- including some conservatives -- have challenged the idea that tax revenue increases over the long term as a result of cuts in the capital gains tax rate, as Media Matters for America has repeatedly documented. Indeed, the Joint Committee on Taxation estimated in June 2006 that the 2006 extension of the 2003 cuts on capital gains taxes would result in decreased revenues of $20 billion over 10 years.
For example, addressing Gibson's assertion, Gerald Prante, senior economist for the Tax Foundation, wrote: "Gibson's implying that cutting capital gains taxes raises tax revenues by the mere time series correlation he cited was a stretch. Much of the short-run response to changes in the capital gains tax rate are for tax timing purposes. This is a well-known fact, and it is why [the Congressional Budget Office] projects a huge spike in capital gains collections in 2010 (the last year of the scheduled low 15% rate on long-term gains) and thereby also a large decline in 2011 (when the rate on long-term gains is scheduled to revert to 20%) under current law." According to its website, the Tax Foundation believes that "[t]axes should raise revenue for programs while consuming as small a portion of national income as possible, and should interfere with economic growth, trade and capital flows as little as possible."
As Media Matters also documented, in an article published in the Journal of Public Economics, N. Gregory Mankiw -- former chairman of President George W. Bush's Council of Economic Advisers -- and Matthew Weinzierl asked, "To what extent does a tax cut pay for itself?" Mankiw and Weinzierl concluded, "In almost all cases, tax cuts are partly self-financing. This is especially true for cuts in capital income taxes" [emphasis added]. Discussing those findings in a 2007 blog post, Mankiw noted, "Matthew Weinzierl and I estimated that a broad-based income tax cut (applying to both capital and labor income) would recoup only about a quarter of the lost revenue through supply-side growth effects. For a cut in capital income taxes, the feedback is larger -- about 50 percent -- but still well under 100 percent."
Further, according to the Congressional Budget Office, past changes to capital gains tax rates alone do not necessarily explain even short-term changes in capital gains realizations. From the CBO's 2006 letter to Congress:
The substantial volatility in capital gains realizations makes it difficult to accurately project gains or discern from historical realizations how much taxpayers respond to changes in capital gains tax rates as distinct from their responses to other factors that influence realizations. For example, substantial increases in gains of 40 percent, 25 percent, and 21 percent occurred in the years immediately following the rate reduction enacted in 1997. Those increases might suggest a large behavioral response to the tax rate cut -- except that realizations also increased by 45 percent in 1996, before the rate cut. Thus, changes in realizations are not necessarily the result of changes in taxes; other factors matter as well.
[...]
CBO has updated its latest models with available data through 2004. Those models, which incorporate changes in the tax rate, fall well short of explaining the surge in realizations that occurred in 2004. Roughly half of the growth in realizations between 2003 and 2004 remains unexplained. After examining the historical record, including that for 2004, we cannot conclude that the unexplained increase is attributable to the change in capital gains tax rates. Volatility in gains can stem from other factors, such as changes in asset values, investor decisions, or broader economic trends.
From the October 19 edition of Fox News Sunday:
CHRIS WALLACE (Fox News Sunday host): That was Senator McCain on Friday standing by Joe the Plumber, who is now a figure of some controversy in the presidential campaign. And back in Washington, we bring in our Sunday regulars: Brit Hume, Washington managing editor of Fox News; and Fox News contributors Mara Liasson of National Public Radio; Bill Kristol of The Weekly Standard; and Juan Williams, also from National Public Radio. So, folks, Joe the Plumber became a figure, or at least an important symbol, in this presidential campaign. And as we mentioned, Senator McCain went on to mention him 21 times during the final debate this week. Brit, is Joe a good weapon for McCain? Does he raise a question about Obama's policy?
HUME: Oh, no doubt about it, Chris. The McCain campaign is in the place now where it needed something -- something big to happen. I don't know whether the Joe the Plumber phenomenon is something big, but it is something, and the reasons are a couple. One is that the guy was here -- what you have embodied in him is the idea of a blue-collar American worker with higher aspirations -- in his case, the aspirations to own the small business -- the small plumbing company -- for which he works. So, he puts this question to Obama about if he were to own that business and make some serious money for the first time, would his taxes go -- his income taxes -- go up? Then the critical thing happened, which was Obama's answer. And Obama explained to Joe that he wasn't trying to punish his success, he didn't dispute that his income taxes would go up, but he thought things worked better for everybody if you spread the wealth around, which was very telling on Obama because it shows you a mindset about taxes.
He earlier gave us a glimpse of that in the interview he did with Charlie Gibson when he was talking about raising capital gains tax rates. And Charlie pointed out to him that, you know, when you've lowered them in the past, you get a gusher of revenue, because people go ahead and take their capital gains and the revenues go up. And Obama said, yes, perhaps, but, he said, he wanted to do it anyway because it was fairer. In other words, that's another case of using the tax system to equalize Americans -- to spread the wealth around, if you will -- and I think that gave McCain a chance to argue his conservative economic policies against Obama, who kind of let it out what he'd like to do, which is to redistribute the wealth through the tax code.
OT, but how much more racist can republicans get?
Thanks John McCain for all you do for this great country of ours...
Hate You Can Believe In: ACORN Deluged with Threatening and Racist Voicemails and Emails
By Josh | October 18, 2008 - 9:42pmIt’s bad enough that the employees of ACORN have had to endure days of baseless and outlandish attacks by John McCain and the RNC. But after McCain outrageously claimed before a national audience on Wednesday night that ACORN was “maybe perpetrating one of the greatest frauds in voter history in this country, maybe destroying the fabric of democracy,” the group came under attack, literally. In the following days, ACORN’s Boston and Seattle offices were vandalized and at least one employee received a death threat.
And for nearly two weeks, ACORN offices across the nation have been subjected to an onslaught of racist and threatening voicemails and emails. We have secured copies of some of the most disturbing and offensive messages and have reproduced them below in order to show the very real consequences of the Right Wing’s overheated and misplaced “voter fraud” rhetoric.
Warning: the emails and voicemails below are highly explicit and have only been edited to remove personally identifying information. Please also note that, where relevant, the proper authorities have been notified.
I have to link the rest, because you're gonna see and hear a whole lotta the n word...
Link to the article
Link to the article
and to another one where a gunshop owner made veiled threats to assassinate obama with his "pre-obama" gun sale.
http://rawstory.com/news/2008/Osama_bin_Biden_at_gun_shop_1017.html
Hard to tell if these people are followers of Christ, but most wingnuts seem to impty that they are.
The lines i liked the most was:
" I just say let your kids die. That's the best move. Just let your children die....And I hope you all die."
Pro--L.I.F.E. ----- Liberals Intended For Eradication.
I amazed that Sarah Palin found the time to call ACORN (voicemail 1).
Looks like he got the boot again cause I never saw his reply. What did he try to attribute to you this time?
I don't remember what he posted, just a bunch of BS using my nick. I saw him posting as ILuvHillary or something on another thread.He's a pretty good rep for the GOP right now, completely out of ideas and trying to shift his shortcomings onto everybody else! ;0)
So true. Love the crap about Powell only indorsed Obama because he's black. And now Powell is a traitor too. Gotta love that big fat racist streak running down the right wing's back...
I don't know if Powell's endorsement is as big a deal as the media's making it out to be, but I was glad to see it. I know I've posted my thoughts on Powell here, that I always felt more pity for him than the disgust I had for the other GOPpers around him.I considered him one of the more decent men in the administration, and always felt that he was uncomfortable with the way he was used.
It's never too late for a little redemption, and nothing ticks off the GOP machine more than one of their own finding their morals.
What are the odds of Grampy McCain living long enough to salvage any shred of his reputation after this campaign?
I, like you Col, still respect Powell a whole lot. I think he was used and abused by Bush, mostly because they KNEW that Powell was respected around the country, and if Powell was calling for an invasion into Iraq, we, the American people, would go for it. I was sort of for it when hearing Powell talk about it. Why? Because it was Colin Powell.
I would wager though, that out of everyone that ever served in the Bush administration, he lies awake at night often thinking about what part he played in the Iraq invasion, and I bet he regrets it very much. Everyone else? Not so much.
Those are some nice folks right there, that's for sure. I know that they don't speak for ALL republicans, but seeing footage from recent rallies and campaign events, it seems like they're starting to become the majority of Palin-McCain supporters.
One way to view FOX news is as a Darwinian selection process. Repeat viewers that keep watching must believe what Hume and other "news" people say is the truth. These are low-information poor-reasoning types. By repeating such false nonsense FOX is selecting out those viewers easily fooled.
They can then present the demographic to companies that want to advertise (after all, they are a business and don't just broadcast for free). Having a large group of such low-information viewers who obviously cannot make very good rational selections and tend to believe shouted propaganda, are ideal customers if you want to sell stuff that does not work too well.
I would not be surprised if the FOX sales people sell ad time on FOX news programs at a higher rate since the low quality of the viewers is perfect to sell all kinds of junk to.
EXTENDEZ anyone?
Uh, Brit, have you been watching the stock market lately?
WHO IS EXPERIENCING CAPITAL GAINS RIGHT NOW?
Cut the rates now and how big of a "gusher" will there really be?
A gusher? Interesting terminology.
I find it a dishonest dodge for starve the beast conservatives to tout, as a good thing, large revenue flows to the same government they despise. This stale old argument of Brit's is all about moving the wealth upward by shifting the tax burden from the wealthy to the working class.
Cons somehow think that cutting taxes on the wealthy and their corporations will magically increase revenues because they'll create jobs that put revenue, by way of consumption and payroll taxes, back into the budget. In that way, the cons argue, as Bush did, the tax cuts will pay for themselves. Besides unfairly shifting the burden onto working people, it's sheer fantasy. It has not worked. Even after the irresponsible wartime Bush tax cuts, jobs still sailed out of the country at alarming rates.
Our tax system is unfair. We should, as Obama proposes, cut taxes on the middle class, get rid of loopholes for wealthy individuals and corporations, and ensure that everyone pays their fair share. Then we can talk about reinvesting in the future
JFK said the same thing, and since cons are so fond of quoting his speech from 1962, in which he lauds tax cuts, I'll provide some context from that speech, "the new tax bill should improve both the equity and the simplicity of our present tax system. This means the enactment of long-needed tax reforms, a broadening of the tax base and the elimination or modification of many special tax privileges. These steps are not only needed to recover lost revenue and thus make possible a larger cut in present rates; they are also tied directly to our goal of greater growth. For the present patchwork of special provisions and preferences lightens the tax load of some only at the cost of placing a heavier burden on others. It distorts economic judgments and channels an undue amount of energy into efforts to avoid tax liabilities. It makes certain types of less productive activity more profitable than other more valuable undertakings. All this inhibits our growth and efficiency, as well as considerably complicating the work of both the taxpayer and the Internal Revenue Service."
After rolling back the top end tax cuts and closing loop holes, we need to invest in areas vital to our future, areas that will ensure our security and our competitiveness, areas like infrastructure, healthcare, green technology and education. Instead of giving all the bread to the fatcats and hoping they drop some crumbs downward, put people to work doing these jobs and put money in their hands so we can rejuvenate the country, and stimulate the economy from the bottom up.Very nice post, Roundhouse. If all of the right wing working- and middle-class suckers could read and comprehend that, the Republican party would be out of business.
But that would involve looking at the big picture, and doing some critical thinking outside of what Fox Nooz and Rush tell them about very short term effects and the benevolence of the super-rich.
I'm not sure what combination of low self-esteem and submissiveness makes the perfect GOP voter, but it's probably pretty close to the ideal brain for a house poodle.
By George, Colonel, you've hit upon it...the house poodle motif is perfect for the GOP voter! From a training manual for the little critters, we see how the right wing dittoheads are trained properly:
"Use single word commands. Don't use potty one time, then bathroom the next then something else the next. Use consistency in your commands so your poodle knows what you're talking about."
Sadly, I think many do understand that, just not the ramifications of it. And hate to say it (again!) but the sad fact is business has decided the US is technologically saturated for the moment and see a huge potential market in China and India. Contrary to popular belief Companies number 1 reason for outsourcing decisions aren't based on taxes and labor costs. Shipping is the primary reason. Having your manufacturing closer to your potential market reduces time to delivery and overhead, and if you think your market is in China, well, that's where you're gonna put your factories.
Not to be ugly, but do you think it's just a coincidence that the people like Sarah Palintwit, who believe that the earth is only 6000 years old, believe in glossalalia, witchcraft and demons.... also tend to vote Republican?
Nothing ugly about the truth, Nerz. Not to lump in all religious people(the vast majority of Americans) with those on the righty fringe, but it is pretty obvious that those who ignore a lot of the spirituality and morals of religion, and go for the cult-style acceptance and literal interpretations, seem to be ripe for the emotional appeals of the Republican party.
Exactly. As history has taught us, some of the most horrible atrocities have been perpetrated in the name of religion. It is unfortunate that monstrous people often cherry pick religious doctrine to reinforce their own prejudices. That's why God, amazingly, seems to always share the phobias and hatreds espoused by those who claim to speak for him.
"Cons somehow think that cutting taxes on the wealthy and their corporations will magically increase revenues because they'll create jobs that put revenue, by way of consumption and payroll taxes, back into the budget."
As I've always maintained, the big gaping hole in this logic is trade policy.
We no longer have the trade policies that favored the American worker that were in still in place during the JFK era. Giving the wealthy tax breaks today simply gives them more money that they can invest in factories in China, call centers in India, and new corportate headquarters in Dubai. Then they can lie back on the decks of their yachts in Florida, collect the dividends, and call themselves "great Americans."
Speaking of call centers in India, I wonder if the McCain campaign is sourcing those robocalls to American workers?
Obviously it can not be true that whenever you lower capital gains taxes (or any taxes) you get more revenue. If you lowered them to zero or close you would get revenue close to zero.
Also this does not seem the best time to take policy actions that would cause people to sell stocks.
There is a mountain of evidence showing that tax cuts do not result in increased revenue to the government. The right wing always points and says,"See? We reduced taxes and tax collections are up! Supply side forever!". The reality, however, is that tax revenues always rise, unless the economy is in a serious downturn. They have risen less after tax cuts than during periods when tax rates are left alone. Clinton increased rates on the top bracket, and the economy, and tax revenues, took off.
The data are clear. Supply side economics is a fraud. Always has been. Hell, if it worked we'd all be rich by now. Isn't that what they promised us? Just give all the money to the wealthy and we'll all be rolling in dough before we know it.
Like all the rest of right wing economic "theory" the point was simply to give all the money to the wealthy. Because they deserve it, don't you know?
Thank you for making that point. I've been beating my head against that brick wall for fifteen years. The typical Republican talking point has been that "Tax revenues doubled after Reagan's tax cuts". Well, the statement is technically true, but misleading. It implies that the revenue stream jumped because of the tax cuts. Truth is that it took about ten years for revenues to double. The interesting fact, as you noted, is that revenues have doubled approximately every ten years since WWII. It's a classic case of the logical fallacy "After the fact, therefore because of the fact."
Trickle Down is the real Republican religion, even among the Trailer Park Troglodytes who comprise the GOP base. The reason is simple.... the Country Club Trust Fund Elites who formulate Republican Doctrine are the ones who benefit most from trickle down. To that end, they've used propaganda to inject it into the brains of the gullible schmucks who run drooling to the polls to vote against gay marriage.
Not only that, Reagan ended up raising taxes because the budget deficits became so enormous. Republicans like to forget that little fact.
It's a classic case of the logical fallacy "After the fact, therefore because of the fact."
Another classic example of this is they one thayt claims "Reagan ended the Cold War". He did no such thing - the Cold War ended when the Soviet Union crumbled from internal forces the destabilized it and caused its satellite nations and provinces to assert their independence.
Giving Reagan credit for the fall of the Soviet Union is like giving a rooster credit for the sunrise.
Not to mention that PigBoy LImbaugh used to say that Communism would collapse of its own weight. Of course, after it did collapse, he changed his story to match the Republican talking point that Reagan did it single-handedly.
It's also interesting to note that Republicans give Reagan credit for spending the Soviets into bankruptcy by pouring money into defense. In the same breath, they will blame the Democrats for the deficits he piled up while doing it.
Not to mention that they spent themselves silly in a war in Afganistan.
Hume's statement not only is true...it is common sense! A large % of people won't sell at a higher tax rate than a lower tax rate and people will not go into an investment with a high tax rate vs. a low tax rate.