Thursday, August 9, 2012

Cutting Taxes Does Not Raise Revenue

So many Republicans believe that it does, though, that the Wall Street Journal's editorial page can say things like this and expect to get away with it:
Every major marginal rate income tax cut of the last 50 years—1964, 1981, 1986 and 2003—was followed by an unexpectedly large increase in tax revenues, a surge in taxes paid by the rich, and a more progressive tax code—i.e., the share of taxes paid by the richest 1% rose.
Interesting that they omit the biggest tax cut ever, the one Bush II passed in 2001, which caused a huge fall in government revenue. Matt Steinglass took a look at the second-biggest tax cut ever, the one Reagan passed in 1981:
Behold the Historical Tables of the Office of Management and Budget. The federal government's receipts for 1981-86, in billions of 2005 dollars:
  • 1981    1,251.1
  • 1982    1,202.6
  • 1983    1,113.4
  • 1984    1,173.9
  • 1985    1,250.5
  • 1986    1,277.2 
Do you see the "unexpectedly large increase in tax revenues" resulting from the 1981 marginal rate income tax cut? Me neither! It took five years just to get back to par.
This is not just another ordinary lie, either, but one that drives the Republican base toward both a false view of the world and a mad rage against people who oppose tax cuts. We will never have intelligent budgeting again until we defeat this mad notion.

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