I find it interesting that some on the board are trotting out the old Laffer curve. It has been thoroughly discredited.
Here are some data points:
National Debt as % of GDP
1947 – 120%
1960 – 55%
1980 – 33%
1990 – 66%
2000 – 55%
2010 – 90%
Please note that the big tax cuts came in 1981, 1983, 2001 and 2003.
Also note that the big tax increase occurred in 1993.
If tax cuts equate to higher revenues (and tax increases result in lower revenues), as Laffer has always proposed, then the deficits would not demonstrate this historical pattern. I’m aware that some try to explain away the US deficit history as being totally influenced by exogenous events, rather than by fiscal tax policy, but for me the overriding and obvious answer is that, generally, higher taxes = higher revenue and lower taxes = lower revenue. Of course, this bit of logic breaks down at some higher tax rate, but we haven’t met that threshold in at least 70 years.
