Everyone knows this, but liberal Democrats go out of their way to rewrite history so as to avoid this truth. Still, if you get hold of an honest economist, and present them with the Laffer curve – illustrated below – it’s not even arguable that tax cuts increase revenue and growth. That dotted line is the perfect tax rate, and we’re not at that rate now.
It’s an undeniable theory that, up to a point, the lower tax rates are, the more economic activity will take place. If you don’t believe it in taxes, look at it in the sale of tangible consumer goods. When they put something on sale, people buy more of it. The only time this theory isn’t employed is when governments are involved, such as with public transportation.
When they start losing money, they raise fares and don’t increase business. Eventually, you have one passenger a day paying $100,000 for a subway token. More Russians are paying income tax, thanks to Vladimir Putin taking a page out of the Steve Forbes economic textbook. Personal income tax revenues rose nearly 47% in 2001. At the same time, tax revenues rose 50% overall. Early results from 2002 look even better.