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.

Advertisements
This entry was posted in Fiscal Policy, Quacks, Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s