If you are familiar with the Laffer curve, then you are aware that tax cuts only increase tax revenue when the taxes are on the right side of the curve.
Yes, I am familiar with the Laffer curve. In fact, the Laffer curve and supply-side economics inspired Reaganomics and the Kemp-Roth Tax Cut of 1981.
One of the differences between liberals and conservatives is the core concept of who can spend your money better… you or the Government. While the Laffer curve helps to dial in the sweet spot of maximum tax tolerance and the point of diminishing returns, it fails to address the people quotient. In other words, economics can define an economic point of tolerance, but it does not reflect compassion.
In a recession, or during a recovery from one form of catastrophe or another, natural or man made, many are in need of assistance. A little tolerance, a little latitude during the recovery is a good long term investment. It’s helps to build quality of life from the bottom-up. A better sense of well being inspires a desire to improve further, and help others along the way. It begets growth and further stimulus. It removes the emotional depression for an economic recession.
Only if you assume that all economic growth is caused by tax cuts. Of course that would be a faulty assumption.
Of course all economic growth is not caused by tax cuts, but to a degree, economic growth can be stimulated by the lowering barriers for people to produce (supply) goods and services. Regulatory burdens, how ever small, have a negative counter effect.
During the Great Recession, the Obama Administration has raced head long into punishing regulatory requirements that have negated and thwarted the very stimulus packages the have endorsed. From the EPA to the medical industry, this Administration has shot itself in the foot time and again rushing to agenda in favor of economic recovery for the nation.
If you look at the tax revenue for any year that taxes were cut, you will see a dip in inflation adjusted tax revenues.
In 1994 President Clinton's own Council of Economic Advisers stated: "It is undeniable that the sharp reduction in taxes in the early 1980s was a strong impetus to economic growth."*
The Reagan tax cuts were followed by a sharp increase in revenue. Total federal revenue, including income tax revenue, rose every year from 1983 to 1988, after a dip in 1982 (due at least in part to the recession of that year--the recession began in December 1980 and ended in November 1982).* From 1982 to 1989, i.e., when Reagan budgets were in operation, total federal revenue rose from $618 billion to $991 billion. (And herein by “in operation” I mean in effect for at least 10 months of a given year.)*
For example, when Reagan became president in January 1981, the top marginal tax rate was 70%--yes, 70%— the right side slippery slope of the Laffer curve, but by the last month of his presidency in January 1989, it was 28%.* (Furthermore, Reagan signed those tax increases with the understanding that there would be spending cuts later on, but Congress broke its word and never passed the promised spending cuts.)
As a result of the Reagan tax cuts, tax payments and the share of income taxes paid by the top 1% climbed sharply.
The economy grew impressively during Reagan’s presidency.* The economic expansion of the Reagan years is particularly impressive when we remember that Reagan inherited a weak and staggering economy.* In January 1981 the unemployment rate was 7.4% and was on its way to climbing to over 10%.* Double-digit inflation had pushed interest rates into the high double-digit range. Real pre-tax income of the average American family had been dropping since 1976, and after-tax income was falling even faster.
Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years.
Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.
So if cutting taxes creates more tax revenue, then why don't we just get rid of all taxes? We would have tons of revenue then wouldn't we?
What a ridiculous statement.
Obviously, we need a government to provide for the safety and security of the nation. But once again, conservative vs. liberal, we come down to the question how much is enough?