To repeat, tax cuts haven't increased revenue
I'm big on adjusting for inflation when measuring the purported positive revenue impact of tax cuts (which makes most of that purported positive impact disappear). But in his blog today, Paul Krugman (who's, like, good at math and stuff) does me one better and adjusts for population growth:
[F]ederal revenues rose 80 percent in dollar terms from 1980 to 1988. And numbers like that (sometimes they play with the dates) are thrown around by Reagan hagiographers all the time.
But real revenues per capita grew only 19 percent over the same period — better than the likely Bush performance, but still nothing exciting. In fact, it's less than revenue growth in the period 1972-1980 (24 percent) and much less than the amazing 41 percent gain from 1992 to 2000.
I should mention here, as one of those weenies who doesn't really think Krugman's column in the Times is so wonderful, that his blog--which he's been writing for a couple of months now--is truly great. Really. It's funny, it's surprising, it's educational. The blog format provides room for the contradiction and creativity and discursion that has long made Krugman's writing so wonderful compelling--but is hard to fit into the confines of a 750-word column. It's a must-read.
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1
Of course they haven't increased revenue. That monster just won't die, will it?
In fact, based on thirty years of tax rates and twenty years of growth data across the whole OECD, low taxes don't even stimulate GDP growth. It's a myth:
http://trueconservative.typepad.com/trueconservative/2007/12/government-ba-2.html
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2
So 19% growth is not growth at all. And there are millions who are ready to agree with you.
Darn, I should become a liberal-economist in my youth their life is so unbelievably easy.
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3
It's less growth than during periods not characterized by giant tax cuts. So one would have to imagine, although of course we can never know for sure without access to that alternate universe where Jimmy Carter won in 1980, that government revenue growth in the 1980s would have been higher without the Reagan tax cuts. That's what people mean when they say tax cuts don't increase revenue--not that revenue will actually go down in absolute terms. (Although it did in the first couple years after the Reagan cuts, when adjusted for inflation.)
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4
Darn again, this job is so easy - just claim that black is white or vice-versa for a change, millions will never doubt it, and there are even some modest money being customary paid for the effort.
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