Wednesday, March 11, 2009

Communist China Knows Tax Cuts Work

If the Communist Chinese know that TAX BREAKS will INSTANTLY stimulate their economy, why can't President Obama figure it out?

HINT: The Chinese didn't have Nancy Pelosi write their stimulus bill.

From BLOOMBERG:
China February Auto Sales Rise 25% After Tax Cuts

March 10 (Bloomberg) -- China vehicle sales surged 25 percent in February, the first gain in four months, after the government cut taxes on some models, helping the country extend its lead as the world’s largest auto market this year.

Sales of passenger cars, buses and trucks climbed to 827,600, the China Association of Automobile Manufacturers said today in Beijing. The tally in the first two months rose 2.7 percent to 1.56 million, compared with a 39 percent decline to 1.35 million in the U.S.

China has halved retail taxes on small cars and drawn up plans to give out vehicle subsidies in rural areas to revive demand after auto sales rose at the slowest pace in a decade last year. Combined with the country’s wider 4 trillion yuan ($585 billion) economic stimulus package, the policies have caused General Motors Corp. to roughly double its forecast for China’s nationwide auto market growth this year.

“Consumers are regaining confidence because of the government’s stimulus policies,” said Ricon Xia, an analyst at Daiwa Research Institute in Shanghai.

15 comments:

MadMike said...

First you can't believe news from China. They are notorious for spreading falsehoods. Secondly, if true, China is one of the very, very few nations where tax cuts have been successful. I suspect Japan (and the U.S.) might be better examples of how disastrous they really are.

Lee said...

Good news for China! That could be good for the US, as they hold most of our debt.

the WIZARD, fkap said...

Hey Mike, Read the article. The news is being reported by General Motors and others, not just the Chinese government.

But, much more importantly, you've said on numerous occasions that tax cuts don't work and government spending does (or will).

Can you cite any examples or evidence. Everything I've read by real economists (not chattering class pundits or the partisan politicians) tell me, with some evidence, quite the opposite.

Government spending is often (almost always) blamed for prolonging the Great Depression. And government spending clearly did not help and most likely hurt Japan's lost decade.

When faced with these virtually indisputable facts, Obama himself has acknowledged them as true and correct, but said (hopefully correctly) that Roosevelt's failure and Japan's failure was they didn't spend enough and didn't spend it quickly enough. This mantra became Obama's driving force behind the 800 billion Stimulus and the need to pass it so very quickly. I certainly hope Obamais right, but, so far, the first dime hasn't hit the economy.

But here is my problem, the three major peacetime expansions we've had in the last 60 years were all fueled by major tax cuts, especially tax cuts on investment profit.

What am I missing?

the WIZARD, fkap said...

MIke, I'llprobably dedicate an entire essay to this, but take a sneak preview peak at this: 49 Economists give Obama, Geithner a failing grade.

These aren't politicans and they aren't party hacks. These are real economists.

Vigilante said...

WSJ's Economists? Not party hacks? That include Cramer-the-comedian? LOL!

Cutting sales taxes, among the most regressive taxes could increase consumption, demand. That's thinkable. But soak the filthy rich. That's going to finance rebuilding the infrastructure without hurting demand.

Lee said...

Hey Vig. Who are your learned experts who report the economy under Obama is right on track?

Soaking people making 250,000 plus. Or maybe you do not mean those rich people. How about the top 50%? They pay 97% of all tax revenue. or The top 1%? They pay 39%.

When the level of taxation becomes punitive, people with the means leave. Mayor Bloomberg figured that out.

shoo said...

You would think people would have learned this lesson by now. In California, we added this luxury tax to boats, because only the rich would pay that tax. It was repealed. Who begged it to be repealed? The boat builders and their employees who were being killed by the huge drop in business.

When you tax the rich, they spend less. Often lots less than the money taxed. This doesn't really hurt the rich. They are still rich. But it does hurt all those people making expensive cars, boats, the airline industry, the bank and investment industry, the makers of wines, champagnes, cavier, clothes manufacturers, etc. Many people working in those industries lose their jobs.

So, when you soak the rich, the people you really hurt are the people whose jobs cater to the rich, and they are hurt far worse than merely paying some extra taxes.

the WIZARD, fkap said...

Vigilante Your post reeks of class warfare..... "Soak the filthy rich" Of course you actually mean people making $250,000 a year. In California that probably means all your neighbors (those damned McCain supporters). Perhaps that even means you.....

Factually speaking, I find virtually no credible economists who support the Obama/Pelosi plan. And Pelosi, bless her heart, is already talking a 2nd Stimulus plan when the first plan has yet to yield a single dollar (and probably won't yeild the first dollar for at least another 30 days).

Oh, and Cramer, darling of the left while he was condemning Bush and Paulson and endorsing Obama, is 100% correct. Actually 110% correct because Geithner must go. The man is a walking disaster. And NO ONE is willing to join the Treasury Department to support or aid him.

MadMike said...

Wizard you asked what evidence I can give concerning tax cuts. I can give you the last eight years under George Bush that they don't work. And you are quoting the WSJ as a fair and balanced source of information?? Once again I am just amazed at your level of spin.

MadMike said...

Hey Wiz off the subject but that radio thing is cool. Unfortunately I'm still trying to figure out how to twitter!! You have a nice site, all politics aside.

Lee said...

MadMike, you regularly quote Clinton's Media Matters. So you really shouldn't throw stones. WSJ has just as much journalistic integrity as any other fish wrapper, maybe more. As for Bush years. He inherited a recession, cut taxes, we had a booming economy until the last 13 to 15 months. Kinda weak proof. Gary Wolfram, Ph.D would agree.

the WIZARD, fkap said...

Actually the 55 straight months of grwoth in the economy under President Bush is the longest single expansion of the economy in the entire history of the United States.

The question might be "what caused the recession?"

Here economists differ with most claiming it was the normal cycle of recession that has occured with astionishing regularity for the last several hundred years (check out my blog entry on The French Revolution).

But a good many point to a one time and totally bizarre combination of EXTREME GOVERNMENTAL INTERVENTION in the housing market and POOR and PITIFUL REGULATION AND SUPERVISION of WALL STREET.

But I cannot find a single person who blames the recession (depression) on tax cuts! Not one!

And, yes, on these matters I consider the WSJ to be an extremely unvbiased source of information. Nobody (absolutely nobody) ever loses money to make a political point!!!!!

MadMike said...

Wizard everyone is talking about the Bush practice of reckless tax cuts and the obvious result. Where have you been? Good grief!

Lee the difference between media matters and the WSJ is that media matters actually provides the media as evidence. You can watch it. The WSJ simply offers a biased opinion based on very little evidence.

the WIZARD, fkap said...

Thanks for the comment which I've read with great interest. I believe I've made my points clearly above. I'll stand on those posts and replies.

We clearly disagree.

shoo said...

Wow...tax cuts cause recessions? Who knew?