[quote=EconProf]SK: When tax rates change it takes a while for the actors in the economy to change their behavior, then the hiring, investing, building etc. to increase or decrease, then output and incomes to change, then the tax revenues approaching the following year’s tax deadline of April 15 to change. These time lags are why it is difficult to ascribe a change in government revenues to an earlier change in the tax rate. And that’s why I gave you the six-year result after the tax rates were changed under Kennedy and then Reagan.[/quote]
I don’t disagree with you at all on this. I don’t know that it’s 6 years. It may be 4, it may be 10. But given that there are so many other variables affecting the cyclical economy (we’ve had 7 recessions in the last 40 years, roughly 1 every 6 years on average, ranging from 2 quarters to the current recession, which is likely to last 8 or 9 quarters), I’m still looking for compelling evidence that tax cuts are stimulative to government revenues, or that tax increases are depressive. There is none that i’ve found, either way.
