| The argument for cutting taxes increasing revenue is that taxation is a cost to business and decreasing taxation decreases costs, frees up capital; more capital is available for investment and hence economic activity increases, increasing the overall tax-take. The extent to which the flow-on effects actually work is hotly debated by economists who study and model this sort of thing. The sides in this argument have a distinctly ideological flavour to one another.
The actual evidence is far more equivocal (as evidence is wont to be). In the three cases you cites, economic activity around the world increased, independant of tax cuts in various nations. The fact that there was increased revenue after the tax cuts does nothing to prove that the tax cuts caused the increase in revenue. One could just as easily, and defensibly, argue that the global increase in economic activity both made it possible to implement the tax cuts and led to the increased tax revenue. In this model, tax cuts take a secondary role to economic cycles.
Bush's tax cuts were implemented as the global economy was slowing down, which is why the federal budget was hit with double whammy: decreased revenue because of decreased taxes and decreased revenue because of decreased economic activity. The third strike of massively increased "foreign policy" spending has led to a budget blow-out. |