The Fiscal and Monetary Policy Thread - All Things Equalibrium

The Something Awful Forums > Discussion > Debate & Discussion > The Fiscal and Monetary Policy Thread - All Things Equalibrium

Deteriorata: Feb 6, 2005

Veskit posted:

With interest rates as low as they are and a growing economy why should we care about the deficit that much when we can print free money to cover it and just debt our way to success?

As long as GDP is on the rise would a plan like this "work"?

The past 30 years have shown us that Republicans only care about the deficit when they're not in power. They will "reform" taxes when in power in ways that make the deficit balloon, then demand that the budget be balanced with spending cuts when they're out of power.

It's a one-way ratchet with them.

Your error is assuming that politicians rationally consider fiscal policy based on what's best for the economy. They don't. Fiscal policy is a tool with which to gain electoral advantage.

Despite your best efforts, there is no way to discuss fiscal policy without introducing ideology and political motivations.

# ¿ Sep 28, 2015 18:26

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Deteriorata: Feb 6, 2005

Veskit posted:

Trump came out with his new yuuuge and glorious tax plan and it looks dangerously appealing to everyone involved except the mega rich. However on paper it seems ok from a republican standpoint, how enforceable is this plan? If implemented would it increase governmental revenue since most taxes are paid by the top anyway? From a brief look it looks insanely unenforceable to expect that you can collect on it, and the lack of corporate taxes seems really dangerous.

https://www.donaldjtrump.com/positions/tax-reform

(please keep it fiscal not political)

First analysis I've seen of it from someone who ought to know what's up:

quote:

Roberton Williams, a senior fellow at the Tax Policy Center, told me today that it�s hard to see how this plan could attain revenue neutrality. While he cautioned that we still need to see a lot more detail, the plan seems to cut tax rates on the highest income so dramatically that there might be no way to offset that lost revenue through the elimination of deductions and loopholes.

�For the plan to be revenue neutral, somebody has to pay more if someone is going to pay less,� Williams told me. �If there�s a tax cut for middle income people, there has to be a tax hike for high income people for it to be revenue neutral.� In a reference to the elimination of all those loopholes and deductions, Williams said: �I don�t see enough there to offset these big rate cuts.�

How would Trump�s plan impact high earners? It is possible, Williams said, that some high earners (say, those who make most of their money in carried interest) would see a higher tax burden. But many top earners would see their rates come down, he said, and it�s unlikely (though we still need more detail to be sure) that this could be offset by eliminating loopholes and deductions.

�From what I�ve seen so far, the cuts in tax rates are large enough that getting rid of tax preferences would not recoup the lost revenues,� Williams says. �The tax rates for high income taxpayers are large enough that you need very big cuts in the tax preferences to make up the lost revenue. I don�t see anything in the plan that indicates there would be a large reduction enough in those preferences.�

So at first blush it appears to be cut out of the same cloth that the rest of the Republican candidates - throw in a tax cut for the middle class to sell a tax cut for the rich, then claim it's revenue neutral without providing any actual details as to how it's possible.

Don't ever take anybody's tax plan at face value, basically. While they all tend to be overly optimistic regardless of party or ideology, some rely more heavily on smoke and mirrors than others.

# ¿ Sep 28, 2015 18:58

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