Douthat on Taxes and Revenues

http://www.futureofcapitalism.com/2010/09/douthat-on-taxes-and-revenues

Ross Douthat, billed as a right-of-center voice on the New York Times editorial page, writes, "while some tax cuts can raise government revenue, the income-tax cuts of the Bush years emphatically did not."

Let's check the numbers. Federal receipts in 2000, the year before Mr. Bush took office, were $2.025 trillion, according to the Office of Management and Budget. In 2007, after the tax cuts had taken effect, federal receipts were $2.568 trillion. Tax rates were cut and tax revenues increased. Think that's all due to inflation? Use the OMB's "constant FY 2005 dollars" (if we could only get the government to start issuing those instead of the fiat greenbacks...). By that measure, following the tax increase, federal receipts rose to $2.414 trillion in 2007 from $2.310 trillion in 2000. Revenue declined from the 2007 levels in 2008 and 2009 because of the recession and the tax provisions of the "stimulus," but it's nonsense to claim "emphatically" that the Bush tax cuts did not raise government revenue.

Now, just because revenue went up after the tax cuts doesn't mean the tax cuts were the cause of the increased revenue. That's the post hoc ergo propter hoc fallacy. And it may be that Mr. Douthat is attempting to make some kind of distinction between the Bush tax cuts on capital gains and dividend income, on the one hand, and those on ordinary income, on the other hand.

I don't think the best argument for tax cuts is that they produce more revenue for the government but that they allow individuals to keep more of what they earn. But if one is going to take aim at the argument that tax cuts produce more revenue for the government, the least one can do is to stay close to the facts, especially if one is to be hurling around muscular modifiers like "emphatically."

by Ira Stoll  |  Sep 27, 2010 at 11:31 am Related Topics:  Press, Taxes receive the latest by email: subscribe to the free futureofcapitalism.com mailing list