ANS -- Killroy from Reddit on the tax cuts

This explains what's going on with the economy and tax cuts.  It explains how much the economy would have to grow to make up for the tax cuts.  there are some good comments on the site -- I added one of them here:

Find it here:  https://np.reddit.com/r/politics/comments/9n2o5s/nearly_twothirds_say_theyve_seen_no_increase_in/e7jcyeh/?fbclid=IwAR3jlTy7-5n3E66RlKC-RI8j6Soz42fC1EtozPeExkQSrATC7BpQdcoKDd4

--Kim

from one of the comments:

[–]hankbaumbach 6 points 1 day ago 

Most people don't realize how massive an amount of money that is

I truly believe that people do not fully understand how much a billion is compared to a million let alone a trillion. The way this scales up is almost unfathomable to human beings.

The best illustration I've found is to translate it to time.

A million seconds is ~11 days.

A billion seconds is ~31 years.

A trillion seconds is ~31 millennia!

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[–]killroy200 Florida 1120 points 2 days ago* 

Edit: Thank you kind stranger for the gold!

More evidence that the recent tax plans were based on personal greed rather than any actual economic policy.

I did some pretty basic math on just how much an economy would have to grow to make up for any tax cuts. You can see the full table here.

If you cut taxes by 10%, you'd need your (taxable) economy to grow by 11% just to get the same total revenue. If you cut taxes by 20%, you'd need your (taxable) economy to grow by 25% just to get the same total revenue. If you cut taxes by 50%, you'd need your (taxable) economy to grow by 100% to get the same revenue. If you cut taxes by 90%, you'd need your (taxable) economy to grow by 9900% to get the same revenue.

Now, the highest year-over-year GDP growth (which isn't exactly equal to taxable asset growth, but it's a stand in for now), is around 18% in momentary spikes, but the average for long-term growth was around 5% and has been declining pretty harshly. Since 2000, annual growth hasn't passed 4%, and since 2010, annual growth hasn't passed 3%. So, if you cut your taxes by much more than 10%, you're saying that you're expecting one of three things:

• You're betting to see a level of growth that we've NEVER experienced in this country to compensate

• You're betting that you can cut an equivalent 10% of the budget for a bit to make up for the loss in revenue

• You're betting that you can make up the shortfall with debt that you pay off later

The first is what's so often talked about, but it's the second and third that actually happen. The real problem here, though, is that most states & the nation as a whole are pretty strapped for cash as is. The infrastructure crisis is well known, but there are any number of problems from education funding to healthcare to social security to understaffed law enforcement & justice systems that plague any given budget book. So, if you cut the budget, then you're gouging already strained departments. If you take on the debt, then you're hurting your ability to deal with a real, external crisis in the future.

All while betting on nearly unheard of growth to occur to compensate for a system that was likely doing just fine in comparison to the artificial crisis now being imposed upon it. In fact, the reduced quality and stability of your state's services is very likely to dampen growth. No one likes crumbling infrastructure or non-functioning schools, and they will take those things into account equally, or more so than your lower tax rate.

Not only that, but you have to consider what happens if you do get that growth. A 25% increase in your economy means more jobs, and more people. They need infrastructure, and courts, and policing. The more people, the more the state now needs to spend to handle things. Yet, all you've really done is gone back to your initial total revenue, while your per-capita revenue is still lower.

Basically, you need your economy to grow in a way that brings in revenue without additional costs to the government, and happens fast enough to keep you from making major cuts or taking on significant additional debt.

That just does not happen in reality. Period. Full stop.

Rather than unleashing the incredible growth to compensate for losses, which Republicans sold to as much of the public as possible, tax revenue as a percentage of GDP is down. Not the lowest, but no where near the highest. The highest revenue to GDP ratio was reached in 1945, at 19.8%. The next highest was in 2000 at 19.7%. 2019's forecasted tax revenue is $3.42T, and the forcasted GDP is $21.136T, meaning we'd have a Revenue as percent of GDP value of 16.2%.

This is down from 2018's ratio of 16.6%, and down even more from 2017's ratio of 17.3%.

The year-over-year increase in tax revenue from 2018 to 2019 is expected to be 2.4%, which is a problem since U.S. inflation rates hit 2.4% in March, and have been climbing since, now at 2.7%. Inflation rates are expected to stay at ~3% for the next year or so, and not go back down until 2020, to 2.5%.

Basically, federal revenue has not only dropped as a percent of GDP, but also compared to inflation. All while we increase federal spending.

Not only that, but our over all tax revenue in comparison to other developed nations is pretty bad. In 2015, according to the OECD, we paid taxes at all levels of government equivalent to 26% of our national GDP. Now a quick google search says that the U.S.'s GDP in 2015 was $18.4 Trillion, which would give us a total tax revenue of $4.69 Trillion.

If we paid just the average for developed nations, at 34%, that would have given us a total revenue of $6.13 Trillion. Granted that doesn't all go to the federal government, but I bet that extra $1.44 Trillion would have still wiped out the $435 Billion deficit in 2015, and had a good bit left to fill in funding gaps.

Hell, if we went as high as Denmark, with ~48%, then we'd be getting $8.832 Trillion across the nation, and we'd be in surplus. We could afford all the bloated military spending, a bunch of infrastructure, a doubled or tripled up space program, a ton of pet-projects, and still be balanced. In fact, when you run out the numbers by comparing Denmark's GDP growth rate to the U.S.'s, as well as the tax ratio to GDP, it turns out that Denmark is the one doing things better. If you started with the same GDP, and used constant forms of the real-world values from 2015, it would take 94 Years before the U.S.'s total tax revenue collected outpaced Denmark's. That's 94 years of more money with which to invest more and create larger growth than Denmark's base rate. After all, with the U.S.'s larger base economy, the magnitude of wealth that we'd be bringing in would be something to behold in terms of buying power.

Not only that, but there are tons of other savings points that we could tap into right now. We could stop buying the Pentagon things they don't ask for, actually do something about the Pentagon's audit problems, increase funding to the IRS to close the tax gap, shift to Medicare-for-All, and I'm sure tap tons of other places that are being mishandled.

Between all of that, we'd have MASSIVE amounts of additional funding to handle pretty much every problem thrown at us. Lots of military spending and lots of infrastructure spending and lots of social spending, etc. etc. The current Republican Party doesn't seem to want to do that though. "Fiscally-responsible" my ass.