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Ranchers.net

is too good to be true. Link below.

"In recent statements, the President, the Vice President, and key Congressional leaders have asserted that the increase in revenues in 2005 and the increase now projected for 2006 prove that tax cuts “pay for themselves.” In other words, the economy expands so much as a result of tax cuts that it produces the same level of revenue as it would have without the tax cuts.
President Bush, for example, commented on July 11, “Some in Washington say we had to choose between cutting taxes and cutting the deficit…. that was a false choice. The economic growth fueled by tax relief has helped send our tax revenues soaring.”[1] Earlier, in a February speech the President stated, “You cut taxes and the tax revenues increase.”[2] Similarly, Vice President Cheney has claimed, “it’s time for everyone to admit that sensible tax cuts increase economic growth and add to the federal treasury.” [3] And Majority Leader Frist has written that recent experience demonstrates, “when done right, [tax cuts] actually result in more money for government.”[4]
In fact, however, the evidence tells a very different story: the tax cuts have not paid for themselves, and economic growth and revenue growth over the course of the recovery have not been particularly strong.
Even taking into account the stronger revenue growth now projected for fiscal year 2006, real per-capita revenues have simply returned to the level they reached more than five years ago, when the current business cycle began in March 2001. (March 2001 was the peak and thus the end of the previous business cycle, and hence also the start of the current business cycle.) In contrast, in previous post-World War II business cycles, real per-capita revenues have grown an average of about 10 percent over the five and a half years following the previous business-cycle peak.[5] By this stage in the 1990s business cycle, real per-capita revenues had increased by 11 percent.
Overall, this economic recovery has been slightly weaker than the average post-World War II recovery. In particular, GDP growth and investment growth have been below the historical average, despite recent tax cuts specifically targeted at increasing investment.
Those who claim that tax cuts pay for themselves might argue that stronger revenue growth in 2005 and 2006 represents the beginning of a new trend, and that the tax cuts could pay for themselves over the longer term. Neither the historical record nor current revenue projections support this argument.
In 1981, Congress approved very large supply-side tax cuts, dramatically lowering marginal income-tax rates. In 1990 and 1993, by contrast, Congress raised marginal income-tax rates on the well off. Despite the very different tax policies followed during these two decades, there was virtually no difference in real per-person economic growth in the 1980s and 1990s. Real per-person revenues, however, grew about twice as quickly in the 1990s, when taxes were increased, as in the 1980s, when taxes were cut. (See Figure 1.)"


Refer to link for Figure 1.

"Even the Administration does not project that revenues will continue to grow at their recent rates or that the tax cuts will pay for themselves. Under the revenue assumptions in the Office of Management and Budget’s Mid-Session Review, real per-person revenues will grow at an annual average rate of just 0.8 percent between 2000 and 2011, only about half the growth rate during the 1980s and less than one-fourth the growth rate during the 1990s.
Studies by the Congressional Budget Office, the Joint Committee on Taxation, and the Administration itself show that tax cuts do not come anywhere close to paying for themselves over the long term. CBO and Joint Tax Committee studies find that, if financed by government borrowing, tax cuts are more likely to harm than to help the economy over the long run, and consequently would cost more than conventional estimates indicate, rather than less. Moreover, in its recent “dynamic analysis” of the impact of making the President’s tax cuts permanent, the Treasury Department reported that even under favorable assumptions, extending the tax cuts would have only a small effect on economic output. That small positive economic impact would offset no more than 10 percent of the tax cuts’ cost. (See box on page four.)
In addition, economists from across the political spectrum — including economists who have held top positions in the current Administration — reject the argument that tax cuts pay for themselves (see the discussion of this issue on page five). In tax policy, as in other aspects of policymaking, there is no “free lunch.”

Have the Tax Cuts Increased Revenues?

After adjusting for inflation and population growth, this year and last year’s strong growth in revenues have barely made up for the deep revenue losses in 2001, 2002, and 2003. Measured since the current business cycle began in March 2001, total per-capita revenue growth, adjusted for inflation, has been near zero. Based on OMB’s latest revenue estimates, real per-capita revenues in 2006 will be only 0.2 percent above the level they attained more than five years ago at the start of the business cycle. In other words, the current revenue “surge” is merely restoring revenues to where they were half a decade ago.
By contrast, five and a half years after the peak of previous post-World War II business cycles, real per-capita revenues had increased by an average of 10 percent. And at this point in the 1990s business cycle, real per-capita revenues were 11 percent higher than their level at the end of the previous business cycle.[6]
Furthermore, the performance of the economy during the current business cycle has been slightly weaker overall than the economy’s average performance over the comparable period of other business cycles since the end of World War II. Investment growth during the current business cycle has been below the historical average, even though some of the Bush administration’s tax cuts have been specifically targeted at investment. Employment and wage and salary growth have been especially weak during the current business cycle.[7] If tax cuts are crucial to economic growth, then the current business cycle — with its large tax cuts — should strongly outperform previous business cycles. Instead, it has performed more poorly than average."


"N. Gregory Mankiw, former chairman of President Bush’s Council of Economic Advisors and a Harvard economics professor, wrote in his well-known 1998 textbook that there is “no credible evidence” that “tax revenues … rise in the face of lower tax rates.” He went on to compare an economist who says that tax cuts can pay for themselves to a “snake oil salesman trying to sell a miracle cure.”[13]

Commenting on President Bush’s claim that tax cuts pay for themselves, the Economist magazine recently wrote, “Even by the standards of political boosterism, this is extraordinary. No serious economist believes Mr. Bush’s tax cuts will pay for themselves.”[14]

The President’s own Council of Economic Advisors concluded in its Economic Report of the President, 2003, that, “although the economy grows in response to tax reductions (because of the higher consumption in the short run and improved incentives in the long run) it is unlikely to grow so much that lost revenue is completely recovered by the higher level of economic activity.”[15] The CEA chair at the time was conservative economist Glenn Hubbard."


There's more at the link, but historical data shows us there's no basis for the claim that tax cuts pay for themselves. It's more hot air from the Bush Bunch. More excuses for tax cuts for the richest people in the USA, while they fight tooth and nail to avoid raising the minimum wage for the poorest.

http://www.cbpp.org/3-8-06tax.htm
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