2016-12-20

Voodoo Economics

Did the Reagan Tax Cuts boost Federal Government tax revenue?

See the big peak on the left of the graph? That was 1981 Q4. The cuts were implemented in 1981 Q3. As you can see, tax revenue never reached the same level before 1996. Revenue eventually hit 20.38% in 2001 Q1, but has dropped since, bottoming out at 15.44% in 2009 Q3 (in the midst of the GFC) and is around 19% at present.

So in terms of the whole "Tax cuts increase tax revenue", it certainly didn't grow as fast as the rest of the economy.