How Supply-Siders Get Revenues Wrong

I’m back from work travel; you know, saving princesses from evil warlocks on a flying carpet with the help of a comedian genie, etc.

A common claim by supply-side economics proponents is that tax cuts pay for themselves, that there’s a win-win for the taxpayer and the government. This is highly unlikely as evidenced from comparisons of government revenue by years. I’ll point you to Dr. Krugman’s graph.

Red line is revenue projection before Reagan's tax cuts

While the argument can be made for tax cuts to stimulate the economy (though this depends, there are many examples where most tax cuts have been saved in times of recession), the argument that tax cuts pay for themselves is a poor one, especially the most famous, Reagan’s 81 tax cut.

Also, I find it particularly hard to argue with these figures, because government revenues are meticulously measured and easily compared over time.

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