The interactive map doesn't allow one to account for increased economic growth. That's the argument behind supply side economics. There are two books that best lay out an approach to fix the budget deficit by cutting taxes. I know this sounds crazy, but I encourage everyone to give them a read. I've also included JFK's speech to the New York Economic Club (He'd be with Republicans today on fiscal issues). Even if you read them as a mental exercise, it will help you understand why Republicans advocate cutting taxes:
I don't disagree that spending is the main culprit of the budget deficit, but there is a way out of our predicament that few if any are talking about. Historically tax revenue is equal to about 18% of GDP. So in order to have a balanced budget at 3.73 trillion we would need a GDP of 20.7 trillion . To balance our budget, assuming no growth in spending, it would take 7 years of 5% growth. It would take 5 years at 7% growth and if we could get to 8% growth, agreed to keep the budget at 3.73 trillion, in year five we could pay 300 billion of our national debt down. In my opinion, growth is literally the only way out of our problem without devaluing our currency. The tax raises necessary to fix our problem would choke off our ability to grow.
Even though its counter intuitive tax cuts work, but they have to be the right kind. All these credits, temporary cuts, refunds don't do anything. Its the flat rate lowering and tax simplifications that increase growth and revenue because it alters long term behavior. A great recent example is Egypt, they lowered their rate from 40% to 20% and doubled revenue while standard forecasting said it would be cut in half. Other example are abound throughout the former Soviet Bloc, you lower/simplify taxes you get more revenue.
In the US we spend more money complying and avoiding taxes then actually do on the taxes themselves. Think about that. If you look at US government tax revenue it's always about 18% of GDP no matter the tax rate. (Look it up, its really interesting it's called Hauser's Law) So the only way the increase revenue is to grow the economy and the highest correlation to economic growth is how many billion dollar companies an economy produces each year. So everything the government does should be centered around freeing start-ups to become billion dollar companies. That means simplified regulation and the removal of corporate welfare, both protect large companies from smaller start-ups.
Comments
The interactive map doesn't allow one to account for increased economic growth. That's the argument behind supply side economics. There are two books that best lay out an approach to fix the budget deficit by cutting taxes. I know this sounds crazy, but I encourage everyone to give them a read. I've also included JFK's speech to the New York Economic Club (He'd be with Republicans today on fiscal issues). Even if you read them as a mental exercise, it will help you understand why Republicans advocate cutting taxes:
JFK's address to the New York Economic Club:http://www.americanrhetoric.com/speeches/jfkeconomicclubaddr...
Econoclasts by Brian Domitrovic: (This book shows why when Bush 43 cut taxes it didn't lead to growth. Mundell's policy mix is key) http://www.amazon.com/Econoclasts-Supply-Side-Revolution-Pro...
The Growth Experiment by Lawrence Lindsey http://www.amazon.com/Growth-Experiment-Policy-Transforming-...
I don't disagree that spending is the main culprit of the budget deficit, but there is a way out of our predicament that few if any are talking about. Historically tax revenue is equal to about 18% of GDP. So in order to have a balanced budget at 3.73 trillion we would need a GDP of 20.7 trillion . To balance our budget, assuming no growth in spending, it would take 7 years of 5% growth. It would take 5 years at 7% growth and if we could get to 8% growth, agreed to keep the budget at 3.73 trillion, in year five we could pay 300 billion of our national debt down. In my opinion, growth is literally the only way out of our problem without devaluing our currency. The tax raises necessary to fix our problem would choke off our ability to grow.
Even though its counter intuitive tax cuts work, but they have to be the right kind. All these credits, temporary cuts, refunds don't do anything. Its the flat rate lowering and tax simplifications that increase growth and revenue because it alters long term behavior. A great recent example is Egypt, they lowered their rate from 40% to 20% and doubled revenue while standard forecasting said it would be cut in half. Other example are abound throughout the former Soviet Bloc, you lower/simplify taxes you get more revenue.
In the US we spend more money complying and avoiding taxes then actually do on the taxes themselves. Think about that. If you look at US government tax revenue it's always about 18% of GDP no matter the tax rate. (Look it up, its really interesting it's called Hauser's Law) So the only way the increase revenue is to grow the economy and the highest correlation to economic growth is how many billion dollar companies an economy produces each year. So everything the government does should be centered around freeing start-ups to become billion dollar companies. That means simplified regulation and the removal of corporate welfare, both protect large companies from smaller start-ups.