<<Wal-mart and Southwest airlines
have the LOWEST prices.
They also have the largest SURPLUSES
(i.e., profits) in their respective
industries.>>
So would you say if they lowered prices further, their profits would go even higher? Would zero prices yield infinite profits?
In government the exact opposite of what you assert is true.
Reagan cut taxes: revenues fell and deficits exploded.
This is the most common and overly simplistic interpretation of the budgetary events of the 1980s. Further, it is factually untrue that the Reagan tax cuts were a major cause of the budget deficits of the 1980s and the "quadrupling" of the debt. (In the 1980s the real debt doubled; it did not quadruple.) Real federal revenues grew at a faster pace after the Reagan tax cuts than after the Bush and Clinton tax hikes. From 1982 to 1989, they expanded by 24.1 percent. Over a comparable seven-year period, 1990-97, a period that accounts for both the Bush and the Clinton tax increases, real federal revenues will have grown by 19.3 percent (see Table 5). The lesson of the 1980s and 1990s is consistent with the supply-side theory that there are behavioral and investment responses to changes in tax rates.
As a share of GDP, federal revenues fell from 20.2 percent in 1981 (the peak year for taxes as a share of GDP in the post-World War II period) to a low of 18.0 percent of GDP in 1984, and rose back up to 19.2 percent by 1989. This would suggest that the Reagan tax cuts were a small contributing factor to the increase in the budget deficit over the course of the 1980s. From 1950 to 1995, federal receipts have averaged 18.4 percent of GDP. Hence, throughout most of the Reagan years and clearly by the end, taxes as a share of national output were substantially above the postwar average.
If the Reagan tax cut was not the major contributing factor to the increasing deficit in the 1980s, what was? There were two primary explanations: (1) a large and sustained defense build-up; and (2) the unexpected rapid decline in inflation and the recession in the early 1980s.
Clinton raised taxes: revenue soared and deficits virtually disappeared.
Oil prices fell into the basement and practically everyone made truckloads of money.
Bush cut taxes: revenue is dropping and deficits are exploding again.
A perfect correlation and the exact opposite of what you claim to be true.
What tax cuts? We’ve only seen a tax rebate.
In fact Federal revenue grew faster under Jimmy Carter than it did under Ronald Reagan. And of course it grew much faster under Clinton than under Reagan.
Your theory is severely lacking.
Carter taxed us into a recession. Clinton taxed us into a recession.
cato.org |
