So, that not how they put it but this chart is pretty damning, despite the amazing claims made in the captions.
So look there were various dips in revenue sense 1965, corresponding mostly to recessions.
Indeed, one of the interesting points, made on the slide which proceeds the now infamous one is that you can make a much stronger case for the Reagan tax cuts which resulted in a revenue dip but it looks like we had almost a return to trend. Not quite but close.
However, one of these dips is not like the others? Which is it? I’ll give you a hint, it is associated with the mildest recession in the post-war period. It’s also associated with the Bush tax cuts.
See how unlike the past there is not even a hint of a return to trend?
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Wednesday ~ July 14th, 2010 at 2:16 pm
Andy Harless
It was specifically because of the tax cuts that it was “the mildest recession in the post-war period.” Reagan’s recovery, by contrast, could easily have happened without tax cuts, since there was plenty of room for a monetary stimulus. But Bush’s recovery came in the face of a near liquidity trap. (See my comment on the earlier post.) I argued at the time that the tax cuts were a good idea from a demand-side point of view, and I think subsequent experience confirms my belief that revenues would not have returned to trend during the Bush administration (or the Kerry administration) in the absence of a large fiscal stimulus. And at the time, the tax cuts were the only option on the table.
Wednesday ~ July 14th, 2010 at 6:08 pm
Karl Smith
I am not arguing against the tax cuts. I am simply suggesting that it is false to believe that the Supply Side effects, which are by nature long-run, would lead to increasing revenues.
Wednesday ~ July 14th, 2010 at 2:18 pm
Andy Harless
P.S. You need links. Both in this and the other post. How do I know what Ezra Klein or the Heritage Foundation even said?
Wednesday ~ July 14th, 2010 at 2:53 pm
Smarter than You
This is some of the worst fakery on the Internet. The dip is most greatly due to the combined economic misfortunes of the 9/11 terror attacks and the popping of the tech bubble….and yet there is still an increase in tax revenues at a lower tax rate by later in the 2000s decade. Both the 2000 and 2008 peaks had to do with bubble-like economies. What a laughable “analysis” from a bunch of politically motivated loons. And saying Heritage agrees with your analysis only adds to your intellectual fraud.
Wednesday ~ July 14th, 2010 at 6:12 pm
Karl Smith
Are you suggesting that the combined effects of 9/11 and the tech bubble were greater than the 92 recession for which there is no dip. Or greater than the massive recessions in the early 80s for which there was only a small dip?
One would expect that to show up in the GDP figures, the employment numbers, the unemployment numbers, industrial production, something . . .
Also, by the bye I wrote several pieces skeptical of the stimulus package as passed and pushed instead for tax cuts on Keynesian grounds.
I just don’t pretend that the supply side effect of tax cuts means that they will pay for themselves.
Thursday ~ July 15th, 2010 at 11:03 am
isa kocher
september 11. you can always blame september 11 for everything. Bush tax cuts impoverished the middle class reduced US tax revunues and led to the largest deficit and worst economy in almost a century. the country is fighting two wars and average workers were losing income before the crash, and the income of the top 1% still going up while the USA economy keeps going south, east west but anywhere but up. every conceivable statistic, every conceivable brand or flavor of economist agree, except supply siders. it’s irrational. mythology.
Thursday ~ July 15th, 2010 at 2:04 pm
Joe D
This shows us nothing. How are you going to tell us what the trend is without running a trend line on the numbers? I know this is not your chart, but as an assistant professor of Economics I’m quite astonished you would argue in the other post and this about permanent trends, then show us numbers from 1990 only. Ignore the fact that a Republican led congress urged Clinton to pass tax cuts in 1997, that the business cycle of the Clinton’s economic boom was reverse (slow growth out of the early 90’s recession, strong growth towards the end … coinciding with the tax cuts of 1997).
Run the numbers in a program that will show us the trendline. You see the huge spike in 2000 (tax cuts of 1997 anyone?). If you ran an actual trend line like any junior broker assistant knows how to run, I’d bet your point would lose a little bit of luster. I’ve checked Heritage’s site but they don’t provide the numbers in an easily accessible format allowing me to draw a chart and trend line. Sure I can mine the numbers, adjust for inflation, but who has time for that. Fact of the matter is anyone can look at the chart and see that even with the dip, govt. revenue probably returned to the trend line (before the current downturn).
So please, run the trend line, then we can discuss trends. Until then it’s just a chart and a poorly thought/executed out argument.
Thursday ~ July 15th, 2010 at 2:38 pm
Karl Smith
So Joe, the previous chart has precisely that, a trend line. It tracks revenue growth from the Clinton tax increases in 93 through 2008.
The only major deviation from trend is associated with the 2001 – 2003 period. Lots of events going on there, but I argue that looking at the long run series above it is implausible to suggest that the recession was the driver.
Also please understand that the following are two very different claims
1) Tax cuts will raise the economic growth / move us to a higher growth path
2) Tax cuts will pay for themselves through growth
The first is a mild though not completely uncontroversial claim.
The second is a significantly more extraordinary claim. It is this claim that I argue is hard to reconcile with the data.
Thursday ~ July 15th, 2010 at 7:44 pm
Hart
Republicans “urged” Clinton to cut taxes. So !#%%#$ what!?!?!? His democratic signature was on the legislation, just as Obama’s is on the tax cut that has put over $300/month into my pocket.
Why is it that (apparently) right wingers think that tax cuts are only good if they come off the pen of a right wing POTUS?
Please. Get real.
Thursday ~ July 15th, 2010 at 10:14 pm
Ryan daigle
Karl, this graph needs to be on a log-scale, not linearly as the y-axis is. With linear scale the most recent moves will appear larger even though, on a percentage basis, they may be the same as previous moves, yeah?
Thursday ~ July 15th, 2010 at 11:51 pm
grngry
Shouldn’t this be directed at the Heritage Foundation, who made the chart?
Tuesday ~ July 20th, 2010 at 10:52 pm
Ryan Vann
Why should anyone care about government revenue?
Tuesday ~ July 20th, 2010 at 10:58 pm
Ryan Vann
Another criticism. This whole escapade suggests a net tax/fees decrease. One would need to prove that effective overall taxes, fines and fees decreased under Bush to even be discussing a relevant topic. .
Friday ~ December 3rd, 2010 at 5:34 pm
Reagan’s Budget Director (and Others) Lambast Bush And The Right Wing’s Tax Cut Theology | Republicans Are Poison
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