You're joking, right? 2 taxpayers, taxpayer 1 makes $50,000, taxpayer 2 makes $100,000. One bracket, 20% and no deductions or exemption. Year one, tax revenue $30,000.
Year 2, 6% inflation, incomes rise 6%. Incomes now $53,000 and $106,000. Tax revenue $31,800. Real tax revenue $30,000. No change.
Same scenario, now with 3 tax brackets. $0-$40,000 15%, $40,001-$90,000 20%, $90,001-$150,000 30%. Revenue year one, taxpayer 1 pays $8,000. Taxpayer 2 pays $19,000. Year 2, 6% inflation, incomes rise 6%. Taxpayer 1, income $53,000, pays $8,600, real tax $8,113. Taxpayer 2, income $106,000, pays $20,800, real tax $19,623.
Once again, according to page 12 of the Treasury document at http://www.ustreas.gov/offices/tax-policy/library/ota81.pdf, indexing of individual income tax parameters did not begin until 1985. Hence, the 11.4 percent drop in real individual income tax revenues from 1981 to 1984 could not possibly have been due to the fixing the bracket-creep problem in 1985.
Yes, I saw that. I was answering your question in post #42:How would fixing the bracket-creep problem cause revenues to drop?
Hence, the 11.4 percent drop in real individual income tax revenues from 1981 to 1984 could not possibly have been due to the fixing the bracket-creep problem in 1985.
I didn't say that it was. You never answered my question. With the double dip recession and without the tax cut, how much should revenues have dropped? You can't blame a tax cut for revenues that were lost because of a recession, can you?