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Tuesday, June 14, 2005
Buffoonery, mark 2
Kevin Drum had an excellent post late last night about Stephen Moore's maiden effort as a member of the Wall Street Journal editorial board. Moore writes: "President Ronald Reagan chopped the highest personal income tax rate from the confiscatory 70% rate that he inherited when he entered office to 28% when he left office and the resulting economic burst caused federal tax receipts to almost precisely double". Drum notes:
After all, we can play this game with any decade. Annual tax receipts are here. Adjusting for inflation and population growth, the supposedly horrible 70s produced an increase in tax revenue per person of 25%. The Clinton 90s produced growth of 40%. In fact, Reagan produced the slowest growth in tax revenue of any decade since World War II. That's a real supply side triumph.
Of course, Drum's statement on Reagan won't be true very much longer. Total tax receipts decreased in 2001-2003, the first time that has happened since 1934 (the first year for which such data is readily available). A decrease in tax receipts is not necessarily bad: everyone would rather pay less taxes. But giving huge tax cuts to the wealthy while increasing spending by 28% (from 2004 to 2000, unadjusted for inflation) is obscene.
