[quote=EconProf]
The clear message: total government revenues collected go UP in the years following the tax cut as the economy expands and people earn more and pay more in our progressive tax rate structure. [/quote]
I think that message is far from settled. From US Treasury numbers:
You’ll note that in the years immediately following the Kennedy tax cuts, revenue was relatively flat. In the years following the Reagan tax cuts in 81 and 82, revenues declined, and it took almost 6 years for them to return to levels before the cuts. In the years immediately following the Bush I tax increases, revnues increased. And after a small decline during the recession of the early 90’s, after the Clinton tax increase, revenues sharply increased (as the economy grew at historically high rates). After the Bush II tax cuts, revenues initially fell sharply for 4 years(beginning with the recession of the early part of this decade), and have risen since but still not to the level they were in 2000.
As I said, there is no empirical evidence that tax cuts raise revenues. Historically, that has simply not consistently been the case. Other factors, of course, have been present. The economy is cyclical, and marginal tax rates are not the only factor which drives it. But the perfect model has not been created. At best, supply side theory has provem to be an incomplete model. At worst, a total failure.
