Bowden, in an effort to make the case against tax cuts and for more government spending from the perspective of the "average American," reveals a stunning ignorance not only of the tenets of basic economics but of history as well. He asserts that President Reagan's across-the-board tax reductions -- which he disparages with the tired slanders "voodoo economics" and "snake-oil pitch" -- caused the deficits of the 1980s and failed to stimulate the economy. These claims are false and easily refuted.
According to the U.S. Office of Management and Budget, federal tax revenues more than doubled between 1980 and 1990 (the Reagan tax cuts were implemented between 1981 and 1983), from $517 billion in 1980 to more than $1 trillion in 1990. At the same time, federal spending rose even faster -- from $591 billion in 1980 to more than $1.25 trillion in 1990. Of course, Reagan acquiesced to the spendthrift Congress, but the fact remains that tax cuts stimulated the economy, and the data makes it clear that the deficits of the 1980s were caused by overspending, not a paucity of tax revenues.
I do not doubt that tax cuts help the economy but Ronald Reagan DID sign legislation to Increase Taxes in 1982 and 1983.
The argument that the near-doubling of revenues during Reagan's two terms proves the value of tax cuts is an old argument. It's also extremely flawed. At 99.6 percent, revenues did nearly double during the 80s. However, they had likewise doubled during EVERY SINGLE DECADE SINCE THE GREAT DEPRESSION! They went up 502.4% during the 40's, 134.5% during the 50's, 108.5% during the 60's, and 168.2% during the 70's. At 96.2 percent, they nearly doubled in the 90s as well. Hence, claiming that the Reagan tax cuts caused the doubling of revenues is like a rooster claiming credit for the dawn.
Furthermore, the receipts from individual income taxes (the only receipts directly affected by the tax cuts) went up only 91.3 percent during the 80's. Meanwhile, receipts from Social Insurance, which is directly affected by the FICA tax rate, went up 140.8 percent. This large increase was largely due to the fact that the FICA tax rate went up 25% from 6.13 to 7.65 percent of payroll. Hence, the claim that the doubling of TOTAL revenues proves the effectiveness of tax cuts is including revenues which resulted from a tax hike to prove the effectiveness of a tax cut. This seems like the height of hypocrisy.
Hence, what evidence there is suggests there to be a correlation between lower taxes and LOWER revenues, not HIGHER revenues as suggested by supply-siders. There may well be valid arguments in favor of tax cuts. But higher tax revenues does not appear to be one of them.
You can find a longer analysis of the effect of the Reagan tax cuts on revenues at http://home.att.net/~rdavis2/taxcuts.html.