Krugman on GOP voodoo: Reagan and Revenues

[flpoljunkie]

June 22, 2011

Reagan and Revenues

The wholesale voodization of the GOP is a sight to behold; apparently the nonsense about the Reagan tax cuts having led to a vast rise in revenue is now something one must claim to believe. Anyway, a quick note about Federal revenue history.

The way I like to look at it is to compare business cycle peaks. We know that recessions reduce revenue and recoveries raise it. So it’s much more informative to look at peaks (not troughs: all happy economies are more or less alike, each unhappy economy is unhappy in its own way). Oh, and since 1979-82 was really one double-dip recession, I just use 1979 and ignore the 80-81 “recovery”.

So here’s the rate of growth of real per capita federal revenues between successive business cycle peaks:



There was no Reagan revenue miracle; growth slowed. There was a Clinton miracle. And there was a Bush II reverse miracle.

http://krugman.blogs.nytimes.com/2011/06/22/reagan-and-revenues/

[treestar]

1. I've always struggled with that right wing claim

At first it makes no sense. Then it does - at least to their philosophy - if there is more business going on, there could be more revenue. But the tax rates alone, to the right winger, is the cause of more business going on.

So any ammunition against that argument is valuable.

[Philippine expat]

2. Like I always tell them, Reagan only lowered tax rates

the 1982 and 1986 tax revisions eliminated many deductions,
plus during the Reagan administration SS tax rates were increased 6 times, plus SS benefits became taxable for the 1st time,
plus he raised the federal gas tax by 120%. Then I tell them, even though Reagan lowered tax rates he actually raised taxes

[treestar]

3. Thanks!

The right wingers are usually so simple minded and overgeneralize from the larger facts and never take the nuances in. So typical of them not to know everything about their own hero!