The Reagan tax rate cuts being a prime example of not only of economic growth from marginal tax rate decreases, but a characteristic growth in government revenue collections that go with growing economies. The Reagan tax cuts is a flawed example.
LOL, your */~rdavis whoever he is, constructs a strawman, and does a lousy job of analysis. The base issue is one of tax avoidence behavior which increases with increasing marginal rates, and decreases with decreasing marginal rates.
If it's such a lousy analysis, then you should have no trouble pointing out specifically which numbers and/or conclusions are incorrect. The fact is, I have presented this analysis to numerous supply-siders and none have yet contradicted anything specific in it. So please, take your best shot.
The fact is, I am yet to see any reputable supply-sider stand by the claim that tax cuts cause government revenues to increase by more than they would otherwise. In fact, they all seem to say otherwise. For example, following is an excerpt from the CATO Policy Analysis titled "Supply Tax Cuts and the Truth About the Reagan Economic Record", co-written by Stephen Moore and online at http://www.cato.org/pubs/pas/pa-261.html:
Fable 1: The Reagan Administration Relied on "Pie-in-the-Sky" Predictions That Tax Rate Cuts Would Pay for Themselves
Supply-siders predicted their tax cuts would pay for themselves. This was nonsense from day one, because the credible evidence overwhelmingly indicates that revenue feedbacks from tax cuts is 35 cents per dollar, at most. Are we really gullible enough to accept a free dinner while still suffering the indigestion from our "free" lunch? [23]
This is one of the great enduring myths of Reaganomics: that the White House relied on wild supply-side assumptions regarding the revenue impact of the tax cuts. The Reagan administration never assumed that the tax cuts would pay for themselves. In fact, "America's New Beginning: A Program for Economic Recovery," the White House budget plan released on February 18, 1981, included a table entitled "Direct Revenue Effects of Proposed Tax Reductions." [24] That table predicted a huge $700 billion revenue loss from the tax cuts through 1986, as shown in Table 4.
Table 4
Reagan Administration's Scoring of the 1981 Tax Cut--Revenue Impact, in Billions of Dollars
1981 1982 1983 1984 1985 1986 1981-86
---- ------ ------ ------ ------ ------ --------
-8.8 -53.9 -100.0 -148.1 -185.7 -221.7 -718.2
Source: Office of the President, "America's New Beginning: A Program for Economic Recovery,"
February 18, 1981, p. 16.
So, once again, if you can find any specific problem with the numbers or conclusions in my analysis at http://home.att.net/~rdavis2/taxcuts.html, please post it.
And that's why the cynical view of the Reagan Administration from Libertarians like the CATO Institute is that "The only reason the Reagan cut taxes was to control spending." In other words, he cut taxes, created a defecit (knowing full well that they don't really matter in the short-term), and watched Dems say that Defecits will make the sky fall. He then challenged them to do something about it: cut/control spending. And it worked, with non-defense spending being controlled.
Is the same thing going on right now? Maybe. But we're not even arguing for a suppl-side tax cut. We want Fundamental Tax Reform.
So, once again, if you can find any specific problem with the numbers or conclusions in my analysis at http://home.att.net/~rdavis2/taxcuts.html, please post it.
As regards my statement of the effect of tax cuts on economic growth which NY took exception to and used your analysis as being a refutation, and why I call that reference a "stawman" and lousy job of analysis.
"The Reagan tax rate cuts being a prime example of not only of economic growth from marginal tax rate decreases, but a characteristic growth in government revenue collections that go with growing economies."
I bring your attention to real per-worker gdp of 1986-2000, compared to real per-worker gdp 1960-1986.
The reagan Economic Recovery Tax Reform Act PL 99-514 brought highest marginal rate down to 28% in 1986 among other specific changes in tax law favoring investment over consumption. Note the subsequent growth in per-worker GDP (as an example of increased productivity and economic growth arising from decrease in marginal tax rates to which my statement was directed.)
The strawman, is one constructed of analyzing total revenue reciepts with regard to decreased rates. My point was concerning economic growth, and the ability of a growing economy to in turn support government revenues in the face of substantially lower marginal tax rates.
I note specifically that your analysis does not look at income reporting of the higher income groups, as concequence of the change in tax avoidence behaviour that goes with rate reductions and more investment friendly tax system.