Great New Yorker article on "Tax cuts pay for themselves"

[KneeCo]

supply-side economics is wrong not as a matter of ideology or faith but as a matter of fact

What a groundbreaking idea: ask the economists/empiricists.

CNN would just have had a Republican on to say it works and a Democratic to say it doesn't, then Wolf Blitzer would have said "CNN RULES!" and cut to commercial.

[Borodog]

cliff notes?

If they don't mention monetary inflation, it's worthless. It really is the case that when government cuts taxes tax revenues go up, but only because they simultaneously create an artificial boom by inflating the money supply.

[andyfox]

"It really is the case that when government cuts taxes tax revenues go up"

Doesn't it depend not only on the money supply, but a whole host of other issues? That is, can we really say that, all things being equal lower tax rates = greater tax revenues?

[Orlando Salazar]

[ QUOTE ]
"It really is the case that when government cuts taxes tax revenues go up"

Doesn't it depend not only on the money supply, but a whole host of other issues? That is, can we really say that, all things being equal lower tax rates = greater tax revenues?

[/ QUOTE ]

lol, rread teh article.

[West]

[ QUOTE ]
That is, can we really say that, all things being equal lower tax rates = greater tax revenues?

[/ QUOTE ]

All things being equal, lower tax rates equals lower tax revenues, as we would of course expect. Tax revenues go up over time because of population growth and inflation. As the article linked to states: "They’re aided in that extrapolation by the simple fact that the American economy grows over time. As a result, even if you cut taxes the federal government will eventually take in more tax revenue than it once did. And that allows supply-siders to fashion a spurious syllogism: taxes were cut in 2001, government revenues are higher in 2007 than they were in 2001, therefore the tax cuts increased revenue. The comparison that really matters in analyzing the impact of the tax cuts, of course, is not between government revenue in 2001 and government revenue in 2007. It’s the comparison between actual tax revenue in 2007 and what tax revenue would have been in 2007 had there been no tax cuts in 2001."

Here's an older link talking about some comments Bill O'Reilly made on this subject a while ago, selling tax cuts. You have to scroll down to get to that part.

The Bush adminstration of course has no shame, and would gladly tell us that 2+2=10 if they think anyone will swallow it.

[bobman0330]

I just skimmed the article, but it didn't seem to break it down by type of tax. I'd suspect that the reported income elasticity wrt the ordinary income rate is much lower than for capital gains or dividends. Most people aren't going to quit their jobs because of a rate hike. But lots of people will defer realizing cap gains, and lots of companies will opt not to give dividends if tax conditions are bad. So the supply-side argument probably has more merit for CG/dividend tax rates.

[Borodog]

[ QUOTE ]
"It really is the case that when government cuts taxes tax revenues go up"

Doesn't it depend not only on the money supply, but a whole host of other issues? That is, can we really say that, all things being equal lower tax rates = greater tax revenues?

[/ QUOTE ]

Did you the rest of my post or just the quoted text?

[Borodog]

If I am elected President, 2+2 will equal 12.

[andyfox]

I didn't see anything in your post other than monetary inflation.

[ianlippert]

[ QUOTE ]
Doesn't it depend not only on the money supply, but a whole host of other issues?

[/ QUOTE ]

Doesnt it depend where on the Laffer Curve we are?