Sunday, September 10, 2006

Read Reagan's Lips: Not Much New Revenue

Jonah Goldberg quotes an emailer responding to Ezra's article on big-government conservatism:
Revenues undoubtedly increased in the 80's... whether the Reagan Tax Cuts maximized revenues or not is a question I suppose, but his conclusion that deficits skyrocketed and inequality shot up as a result of the tax cuts is simply not substantiated and his claim revenues did not increase dramatically is not true.
Kevin Drum had the answer to all this a while ago. Once you account for inflation and population growth (a larger population will naturally generate more revenue) you can see that revenues didn't increase dramatically in the 1980s. In the 1970s, the per capita increase in revenue over the decade was 25%. In the 1980s, it was 18%. And in Clinton's 1990s, we got a whopping 40%. Meanwhile, the deficit nearly tripled in the 3-year period surrounding Reagan's huge 1981 tax cuts, running from $74 billion in 1980 to $208 billion in 1983, while Clinton's tax increases ensured falling deficits for every year of his term.
[Cross posted at Ezra's]

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