Monday, May 08, 2017

Reagan's Tax Cuts and Increased Income Tax Revenue.

Real Clear Markets reports:
Except for a 3% decline in 1983, federal income tax receipts grew significantly and steadily during Reagan’s presidency, averaging 6.4% growth per year from 1981 to 1988 (overcoming the 3% decline in 1983 and the 50% reduction in capital gain tax receipts from 1986 to 1987).

The reason why income tax receipts grew substantially over the course of the Reagan years despite the substantial cuts in tax rates? Economic growth spawned by the incentives generated by these lower tax rates, just as predicted by the supply-siders. Annual GDP growth averaged 3.6% during the Reagan years (nearly double the anemic, ~2% GDP growth experienced during the Obama years).

The budget deficit did grow during the Reagan years, but the data clearly show that the deficit increase was not a result of Reagan’s tax cuts.
Facts are stubborn things.