>There was a great article in Scientific American in 1981 pointing out the fallacy of the Laffer curve, and how the statistical claims of supply siders were rubbish.<
I may have read this article, but do not remember it. In any case, to say that tax cuts can not lead to increased revenues is false. The fact is that tax cuts can lead to increased revenues. The problem is determining whether increased revenues are the result of tax cuts or higher wages resulting from increased deficit spending.
If I have a store and borrow money to give $100 to each of my customers, and the average customer spends $30 of this in my store, I have increased my revenue, but my debt increases more than if I had not borrowed money to give to my customers.
>If you have a tax cut and 3 tax hikes, and attempt to attribute the behavior of the system exclusively to the tax cut, then you are going to come up with a meaningless conclusion.<
If what you listed here were the only causes, it would indeed prove the point. Not that even after the tax hikes, taxes for the rich remained lower than before. So even if you could not attribute it to the decrease from 70% to 28%, it could be attributed to the decrease from 70% to the final 41% tax rate.
However, as pointed out above, deficit spending increased, and this would result in an increase in revenue. Figure out how much, and you might be able to determine whether the tax cut increased or decreased revenues. |
