Quote:
Originally Posted by Ironduke
Shek, how did tax revenues increase $700 billion from 2004-2007?
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A few explanations off the top of my head.
1. Growth. Real GDP increased from $10.5 trillion to nearly $11.7 trillion (some of this could be attributed to the incentives provided by the tax cuts, but definitely not all of it).
2. Think about all the dot com busts from 2000-2001. Deductions on these capital losses would have been used up either just at the start of the period or during the period, meaning an "artificial" increase in tax liabilities simply due to timing.
3. Housing boom. The increased volume of home sales meant more taxable transactions during a time of great appreciation, along with more people incurring capital gains due to selling assets to finance a down payment.
4. Baby boomer retirement boom. Once you retire, you start divesting assets to fund retirement. As more and more baby boomers retire, this means greater tax revenue.