Tax Cuts Do Not Pay for Themselves

The latest Congressional Research Service paper (July 27 memorandum cited in press reports) discussing the effect of extending the President’s tax cuts is one more piece of evidence that tax cuts do not pay for themselves.

One simply needs to look at what has happened to revenues since the President’s first tax cuts were passed at the beginning of the President’s first term.  Inflation-adjusted revenues have experienced virtually no growth since 2000 and are well below what Republicans predicted when they passed the tax cuts.  Much of the recent revenue increase results from corporate taxes and non-withheld individual income taxes, which impartial experts believe is temporary.

As the New York Times reported on July 9 of this year:  “One reason the run-up in taxes looks good is because the past five years looked so bad. Revenues are up, but they have lagged well behind economic growth….