Mr. Dionysius,

Don't seem to have "paid for themselves" at all, in part I think because they were in fact oriented towards the lower income quintiles and amounted to very little in effective reduction of marginal tax rates. This is a useful table to show what actually did happen -

http://www.nber.org/~taxsim/marginal-tax-rates/plusstate.html

The top quintile pays over 80% of the taxes that are likely to respond to incentives. If one wants to move tax collections closer to the "sweet spot", the high point of the Laffer curve if you will, it is tweaking in this area, "tax cuts for the rich", that will yield results.

Compare the results of tax collections in 2002-2003 vs what did happen in 2004-2006, after the very effective 2003 JGTRRA, which dramatically reduced taxes on dividends and capital gains.

My only problem with this statement is that investment behavior really didn't change with the '96 capital gains decreases.

I do know of people who are sitting on assets instead of selling them because of concerns regarding capital gains taxes -- what baffles me is that inflation is apparently not part of the calculations for long-term investment? I mean, sure, ignore it for a yearlong purchase to make the math easier, but if someone holds ground for 50 years, inflation alone is going to cause it to quadruple in price (at least).

:) . . . Seriously, I do agree.

yet in the interests of reasonableness, it seems only fair to note the parabola I describe. Lowering a fundamentally progressive tax like income tax on the very wealthy makes Liberals suspicious: it looks too much like a payback for Bush's Base, and I dare say it is a payback. A Liberal like me says, "hey, wait a minute, if the rich pay less tax, doesn't that imply less taxes collected?" Apparently, the answer is more complex than it might seem at first glance.

Maybe I'm defending Luis from sheer perversity. Luis Alegria's math seems to work: the CBO models aren't accounting for the true amount of tax collected, and I don't have a good answer why they routinely under-predict. I'm a model maker, I build these contraptions, the actuaries feed them data, and I have to go back to the drawing board like Wile E Coyote at least twice a week to tune them.

I don't think Luis is an advocate of Supply Side, but I have my own Liberal version of Supply Side. I don't care how rich people get, as long as more poor people climb out of poverty and into the middle class. In the course of this migration, the rising tide floats all boats. The middle class is increasingly falling victim to the AMT, a beartrap invented to catch the Very Rich, but now catches far too many taxpayers. That's what happens when we invent these traps, it's easy to demonize the Very Rich saying, "oh, those rich guys, let's soak them, they can afford high taxes." Be careful what you ask for, when you legislate bear traps like AMT, you might get it. Those whom the gods would destroy, they answer their prayers.

Taxation ought to be taken away from the politicians: the tax code has grown to brobdignagian proportions, and one man's loophole is another man's safety net. I believe econometrics and taxation obey the laws of every other dynamical system, and can be modeled. The goal of such a model must provide an effective taxation strategy. In the course of developing such models, we can eliminate regressive taxation, market distortions caused by tax avoidance strategies and budget deficits. There is no excuse for our current piecemeal taxation strategy and all this shouting: the Dismal Science ain't politics.

Gabe states "tax cuts do not pay for themselves."

In opposition we state, sometimes they do, you cannot make a definitive categorical statement.

Now, has the treasury recieved more income on an annual basis after that Bush tax cuts, than before them?

If so, then we can afford them, unless the resulting deficit impedes the economy (assuming spending still exceeds income - a safe assumption).

Now, interesting to note, Gabe's point - "meaning that tax cuts spur enough growth that total tax intake is at least as high as it would have been without the tax cuts" - is not the same thing the "expert" stated - "Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," said Alan D. Viard.

The entire purpose of the tax cuts is not that future government revenue will be maximized, and a tax cut does "pay for itself" if the revenue is measurably larger than before, not if the tax revenue is maximized. The debate is whether the increased economic activity was increased partially/primarily by the cut. It is a question of how much to attribute to the incentive spur.

Those R sources do not say what Gabe claims - hence he is arguing a strawman.

Yep, politicians are arguing with sound bites, claiming authorship of good things and running from the bad.

But no one argues that 35% of x is larger than 50% of x, just that x will be larger in the future if more of it is invested in the economy, and not in taxes.

. . .a commenter was the teacher of an expert that you happen to be touting as a (rather weak) method of sarcastically rebutting that commenter's remarks is fairly close to arguing that the other commenter can't discuss a topic without (x) credentials, which I indicated* a while back that I would consider as uncivil. Make your case without denigrating Luis' credentials to discuss economics.

Edit: *--the comment where I so indicated can be found here.

In the reports of your favored experts. He has offered measurable differrences and backs up his data.

You, at least on this diary, are simply demanding deference to your choice of experts.

Such deference to "experts" is not warranted, nor is it logical.