Henwood said, " . . extremely high capital gains and a generally strong economy have probably had a greater effect [on revenues and the surplus--mbs] than that rate boost. . . . "
By the CBO numbers, the CG effect is much larger than the rate increases, but changes in GDP, AGI, personal income, and income distribution are much more important than CG. For 1994-98, CG is 31% of the total revenue gain of $134b (aggregate, and in excess of GDP growth). Deficit reduction in this period was far in excess of $134b, much less a third of that amount.
The rate effect is around $10b annually for the 94-98 period. The growth in revenues from higher rates is limited to 1994-95. (In other words, after taking a step up, revenues continued on a higher plane by virtue of rate increases.) By contrast, CG contributed a rising amount to revenues throughout the period, though still less than a third of the total growth (over and above GDP growth).
More important than either rate changes or CG are the effects of faster growth in GDP, taxable personal income, tax bases, and taxable income accruing to higher income persons. So a fixation on the rate increases or CG in isolation would be wrong.
In 1998, total net CG was about 8 percent of AGI. The CG effect stems from the change in that share, and is further dimmed in light of the fact that the individual income tax is not the sole source of Federal revenue. The rate increases of 1993 did not pertain to CG, and of course Clinton signed off on rate decreases on CG in 1997.
> [mbs] hell, under Reagan taxes went up seven times,
> after the 1981 cuts.
NN: "But he did not increase income taxes, especially on the wealthy. Yes, payroll and other taxes hitting the working and middle classes did increase. And the 1983 and 1986 tax bills actually reversed some of the massive tax goodies for corporations, notably some of the provisions of the 1981 bill that had let many corporations paying zero tax."
[mbs] "Reagan" (meaning the Gov during his term, with his approval) raised taxes by $112 billion in annual terms, of which about $31 billion was Social Security revenue. It is true that a good part of this reversed breaks in the '81 act. But the Soc Sec part is not that large. Most if not all of the rest is income tax(es). This is all before big-taxer/spender G. Bush (see The Tax Decade, by E. Steuerle).
NN said: " . . . The share of income taxes paid by the top one-fifth of earners has risen since the depths of Reaganomics - a big part of cutting the deficit. . . . "
[mbs] The extent of such revenue stems from changes in tax rates, economic growth, and the distribution of income. The rate effects pale in magnitude in light of the other factors.
Since we would not expect higher rates of tax on the rich to increase pre-tax income of the rich (if anything, the contrary), the preferred estimate of the rate effect would be based on the 'old' distribution of income. CBO reports that most of the revenue growth is from changes in real income, the distribution of taxable income by income bracket, growth in GDP, and in taxable components of personal income.
" . . . The question is to compare how much the wealthy would have paid absent the 1993 tax bill and compare that to present income tax revenue. Total annual income tax revenues have increased to $990 billion per year since 1993 when it was $509 billion- nearly doubling total income tax receipts. Given that the richest 5% pay half of all income taxes, that adds up to an increase of $240 billion per year paid by the richest 5% and an increase of $150 billion per year paid by the richest 1%."
[mbs] No. As noted above, the revenue proceeds stem from both tax base changes (how large, and what rates they are subject to) and rate increases, so applying new rates to new bases would be wrong, in my book. It gives Clinton credit for a worsened distribution of income (hmmm). Your remark says nothing about how important one is relative to the other. The same follows for changes in the share of total revenues accounted for by different taxes. The share depends on both base and rate.
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NN again, on politics: " . . . As for securing the surplus, the GOP agrees with you on getting rid of it, but they don't plan to spend it, but hand it back to the wealthy through tax cuts. How Clinton or Gore opposing that makes you want to support Nader is beyond me. The spending on prescription drugs, overwhelmingly popular with the public, hasn't been passed by the GOP, so how would proposing a lot of other spending make any difference? . . .
Yuk yuk, the GOP 'agrees' with me. Actually, it's C&G opposing any use of the surplus beyond pissant programs that encourages me to look to RN. The GOP only wants to get rid of about half the surplus, which is not a bad decision, in and of itself.
You ask, why should Dems propose more, if the GOP won't pass even a little spending? To make the case that more spending is both feasible and worthwhile. The GOP has figured out that proposing big tax cuts is a way to popularize the idea, even if you don't get them the first time around. They proposed the same stuff last year that they are passing (with increasing Democratic defections) this summer, albeit in pieces. Clinton is ready to make compromises and trades on them, while the Repugs have the political initiative.
I'd much rather have the burden of defending some big new spending initiative, rather than knocking somebody's treasured tax cut. Let the conservatives be Scrooge, and I'll get nicer e-mail.
mbs