Know Your History: How Tax Cuts Have Increased Economic Growth Over the Years
Opponents of tax reform repeatedly use the same tired arguments: they claim tax cuts only help the wealthy and will lead to a decrease in federal revenue.
The truth is, these claims are unfounded. History shows just the opposite.
The Kennedy, Reagan and Bush tax cuts have all led to increased federal revenues and increased economic growth.
Mary Kate Hopkins, deputy director of federal affairs for Americans for Prosperity, and Michael Decker, senior research analyst for Freedom Partners Chamber of Commerce, discuss the historic positive impacts of tax cuts in their op-ed in the Wall Street Journal:
A new report from Americans for Prosperity and Freedom Partners details how tax cuts across the decades have boosted federal revenue while growing the economy, providing a model for today’s lawmakers to emulate.
In the 10 years following the Kennedy tax cut (proposed by JFK in 1962 and enacted in early 1964, just months after Dallas), federal tax receipts increased by $283 billion. The decade following the Reagan tax cuts of 1981 (fully phased-in by 1983), revenue rose by $400 billion. In the 10 years after the Bush tax cuts, tax receipts climbed by $227 billion.
Revenue grew because the tax cuts stimulated economic growth. In the five years following the Kennedy tax cuts, average quarterly GDP was 5.2 percent; for Reagan it was 5 percent; for Bush, 3 percent.
Tax cuts done right produce more federal revenue and shift the tax burden to those most able to pay, precisely the opposite of what the doomsayers claim.
We should not let myths guide policy, especially if it means settling for the “new normal” of 2 percent growth, stagnant incomes, an ever-growing government and deficits as far as the eye can see.
Read more about how pro-growth tax reform has helped spur economic growth in the full op-ed here.
