About the 3% Bush Tax Cuts

The Bush Tax cuts were relatively small - about 3%.  It's not enough to fix the tax rate.  I heard Senator Rubio (Most Dangerous Republican for 20116)  talk on the Daily Show recently.  He made a lot of comments that indicate immense failures of basic logic.  Mostly things where he argued one way to support himself, then ignored his own logic when it proved him wrong.  Here are some simple facts that he seems not to know.  I am grouping together supporting facts with conclusions.

About tax raises not helping the deficit:

1. In 2012, the tax deficit is about $1.17 trillion  (source).  In 2011, the US Gross Domestic Product (GDP) was about $15 trillion (source).  Note the economy is significantly more than 10x bigger than the deficit.  
2. By his own admittance, the economy is affected by many more things besides taxes, as proven by the fact that  GW Bush lowered taxes but the economy got bad.   Tax rates have a direct result on tax income, but a REDUCED effected on the economy, as it has to go through the filter of the Government. 
3. If something is too small to significantly affect the deficit then it must also be too small to significantly affect the economy.   
4. Granted, if taxes are set at 100%, no one works, so you get no taxes, and lowering taxes rates would increase tax revenue.  But but similarly, if you lower tax rates to 0, you get no taxes.  So it IS possible to raise tax revenue by raising taxes, at least under certain circumstances.  Somewhere between 100% and 0% is the optimal tax rate.  At that rate if you change it in either direction (raise or lower), then total revenue goes down.  But we don't know where it is.  It could be at 20%, it could be at 80%.   I'm fairly confident that it is in fact between those two numbers.
5. I'm not saying that taxes are already that low, but I am saying that you CAN'T just claim that taxes are already too high.  We don't KNOW and the GOP has made no attempt to prove it.  They just go with the wild ass guess that it has to be lower than the current tax rate because if they say that people vote for them - even if they are wrong and doing so would make things worse.   
6. When they passed their tax rate, they economy got worse.
7. Worse, not only don't we know the 'perfect rate', it could VARY.  That is, in a good economy, it could be say 30%, and in a bad economy it might be 20% - lower to encourage people to take more risks and make profit.  Or maybe in a bad economy it could be 40% - higher to encourage people to work harder to make more money.

There are a few more things Rubio does not seem to know.   When the government takes in money, it doesn't disappear.   It gets IMMEDIATELY spent.   How immediately?  Well, technically we spend it BEFORE we get it - because we have a national debt.    Profits that people at the high end of the tax brackets get put in the bank.  They sit until they accumulate enough to buy things.  A house, a car, a boat, a 100 shares of stock, a $10,000 bond, etc.  Some of the money also gets spent  outside the country.  The wealthy invest in foreign stocks, send money to Swiss bank accounts, buy foreign cars.

The government is far more likely to 'buy American'.   Moreover, money spent by the government tends to go to poorer people than money spent by wealthy people.   Guess what, poorer people  are in debt which means, like the US government, they spend it BEFORE they get it.   Net result, money collected by the government helps the GDP quicker.  Higher taxes can in fact raise the GDP.

Finally, Rubio made some blatantly wrong assumptions.

• He claimed that the deficit was the single most important thing.  No.  We can fix the deficit simply by allowing inflation to run wild - or even simply declaring bankruptcy and not paying it.  Our lives are more important than the deficit.  Similarly we will NOT give China all of our military hardware and have them pay off the debt.  Nor will we sell US Citizenship to illegal immigrants to get rid of the deficit.   Nor will we abandon our Constition just to eliminate the deficit.  There are LOTS of things more important than the deficit.  Rubio used this false assumption to ignore anything that Democrats like, but casually 'forgets' about it when he wanted to do things the GOP likes.
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