All tax cuts are not good for the economy!

Andrew Tobias points out an argument that isn't heard nearly enough.

We've heard it argued countless times that when the government cuts, it's revenues always go up, which is absurd on it's face. Of course, as Andrew argues, that is clearly true when the top tax bracket is preposterously high, as they were during, Ike, Kennedy, and even Reagan's terms.

However, there is an obvious limit to this argument. If you cut taxes to 0%, your tax revenues will not go up. Therefore the trick is to find the threshold at which the reduced revenues in taxes caused by the rate reduction are made up by the increase in the size and growth of the overall economy, creating a net revenue gain. A simple example is, if a cut from 15% to 10% causes a double of the overall income generated, that is a net gain. 15% of 100,000 is 15,000. 10% of 200,000 = 20,000.

Many would argue as Andrew does that the Clinton top rate of 39.6% was about right, and the Bush cuts overshot the mark. There is a fair amount of evidence to support this position.

Any honest assessment of tax policy has to start with the position that all tax cuts are not a good idea. If you can't admit that, you shouldn't be allowed to talk about taxes.