right-o-rama

Lots of opinions being voiced out there on the Rove thing. Voices from the left and MSM shouting bloody treason, and on the right well… I think they’re having fun watching all of this. Witness this recent blog entry:

ScrappleFace: Rove Resigns Over Ignorance of Plame’s Name

Here’s a more in-depth demolition from NRO today of Krugman’s latest column. Luskin has been making sport of Krugman for awhile now, must be really getting on Krugman’s nerves I imagine.

Krugman Truth Squad: Donald Luskin on Paul Krugman, the Laffer Curve, Tax Cuts, and Rising Tax Receipts

Paul Krugman is up to his usual tricks in his latest opinion column, in which he tries to explain away the recent increases in U.S. tax receipts as mere “blips” as opposed to signs of increased economic activity in response to recent tax cuts.

Here’s his first statement:

It turns out that all of the upside surprise in tax receipts is coming from two sources. One is tax payments from corporations, up both because last year corporate profits grew much more rapidly than the rest of the economy and because the effective tax rate on corporations went up when a temporary tax break, introduced in 2002, expired. Both are one-time events

Our friend Mr. Krugman must be prescient indeed if he can discern that the rise of corporate profits was just a “one time event” last year. I wonder if his investment portfolio is heavily weighted in favor of short-sell positions in anticipation of the reduced profits in the future? In fact the leading economic indicators have been generally supportive of a sustained growth for the future, Krugman should either validate the statement or retract it.

The other source of increased revenue is nonwithheld income taxes - taxes that aren’t deducted from paychecks but are instead paid by people receiving additional, nonsalary income. The bounce in nonwithheld taxes probably reflects mainly capital gains on stocks and real estate, together with bonuses paid in the finance and real estate industries. Again, this revenue boost looks like a temporary blip driven by rising stocks and the housing bubble.

Note the tricky use of the probably qualifier when Krugman attempts to attribute the non-withheld taxes as capital gains on stocks and real-estate? Krugman attempts to argue that these are also temporary blips in tax revenue, and not part of a larger trend. In fact, a very large portion of non-withheld taxes are for estimated tax payments made by small business owners from LLCs or partnerships who are required to make these estimated payments based on projected profits for the coming year. Another large source of non-withheld taxes comes from estimated tax payments by individuals with mid to high incomes that are not fully covered by the standard withholdings schedule.

Thus it is clear that the increase of non-withheld tax reciepts is in fact a very healthy indication that the economy is growing well for small businesses and individuals, something that Krugman is desperately trying to keep you from realizing.