Published July 22, 2005 in the East Valley Tribune as “Tax cut windfall a fallacy”
Senator Kyl may be up for re-election in 2006, but that’s no excuse for engaging in the kind of misleading rhetoric that can put people’s lives at risk. Kyl flatly stated in the July 12th Tribune that “lower tax rates actually result in greater tax collections.” George H. W. Bush in 1980 described this as “voodoo economics” for good reason. No credible economist, not even strong believers in small government like Milton Friedman, would agree with Kyl.
Everyone would like to believe you can get something for nothing. President Reagan did reduce income taxes for wealthy Americans, but an increase in Social Security taxes wiped out the tax cuts for everyone else. The result: government revenues fell except for Social Security, and it took nearly 20 years to eliminate the structural deficits. Repealing part of those tax cuts on wealthy individuals by the Clinton Administration helped enable President George W. Bush to inherit the largest surpluses in decades.
So I ask Senator Kyl, if it were really true that reducing taxes, especially for the richest people in a society, increased revenues, then why haven’t the Bush tax cuts, which Kyl supported, led to record budget surpluses? Economist Scott Lilly of the Center for American Progress has estimated personal income climbed by 15 percent from 2000 through 2004, yet the Congressional Budget Office found personal income tax revenues declined by nearly 20 percent in the same time period as reported last October by the New York Times. Read the rest of this entry »