On July 13, Senate Minority Leader Mitch McConnell, R-Kentucky, asserted that there was no net revenue loss from any of the Bush tax cuts, in defense of an earlier comment by Senator John Kyl, R-Arizona, that all spending increases must be offset so as not to increase the deficit but tax cuts must never be offset. Said McConnell:
“There’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.”
Bush administration economists, however, never made any such claim. Following are a few of their statements regarding the revenue feedback of the Bush tax cuts.
Andrew Samwick, chief economist at the Council of Economic Advisers during George W. Bush’s first term, in a January 3, 2007 blog post:
“You know that the tax cuts have not fueled record revenues. You know what it takes to establish causality. You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one. If I’m wrong, show me the evidence … and tell me why the tax cuts were so small given their effects on revenues.”
Alan Viard, senior economist at Council of Economic Advisers during Bush’s first term, as quoted in the Washington Post on October 17, 2006:
“Federal revenue is lower today than it would have been without the tax cuts. There’s really no dispute among economists about that.”
Robert Carroll, deputy assistant secretary for tax analysis at the U.S. Treasury Department during Bush’s second term, as quoted in the Washington Post on October 17, 2006:
“As a matter of principle, we do not think tax cuts pay for themselves.”
Edward Lazear, chairman of the Council of Economic Advisers in Bush’s second term, in testimony before the Senate Budget Committee, September 28, 2006 (p. 11):
“Will the tax cuts pay for themselves? As a general rule, we do not think tax cuts pay for themselves. Certainly, the data presented above do not support this claim. Tax revenues in 2006 appear to have recovered to the level seen at this point in previous business cycles, but this does not make up for the lost revenue during 2003, 2004, and 2005. The tax cuts were a positive step and have contributed to the enhanced economic growth, additional jobs, higher real disposable income, and the low unemployment rates that we currently see today.”
At his Senate Finance Committee confirmation hearing on June 27, 2006, Bush’s nominee to be Secretary of the Treasury, Henry Paulson, was asked if he thought that tax cuts paid for themselves. He replied (p. 18):
“As a general rule, I do not believe that tax cuts pay for themselves.”
In a 2006 article published in the Journal of Public Economics, economist Greg Mankiw, who chaired the Council of Economic Advisers during Bush’s first term, estimated the long-run revenue feedback from a cut in capital taxes at 32.4 percent and 14.7 percent for a cut in labor taxes.
A 2006 analysis of extending the 2001 and 2003 Bush tax cuts by the Republican-leaning Heritage Foundation estimated that only 30 percent of the gross revenue loss would be recouped through behavioral effects and macroeconomic stimulus.
A 2005 Congressional Budget Office study during the time that Republican Doug Holtz-Eakin was CBO director concluded that a 10 percent cut in federal income tax rates would recoup at most 28 percent of the static revenue loss over 10 years. And this estimate assumes that taxpayers have unlimited foresight and know that taxes will be raised after 10 years to stabilize the debt/GDP ratio. Without foresight and no compensating tax increases or spending cuts, leading to an increase in the debt, feedback would be negative; i.e., causing the revenue loss to be larger than the static revenue loss.
The 2003 Economic Report of the President during Bush’s first term stated (pp. 57-58):
“Although the economy grows in response to tax reductions (because of higher consumption in the short run and improved incentives in the long run), it is unlikely to grow so much that lost tax revenue is completely recovered by the higher level of economic activity.
”The actual data show pretty convincingly that the Bush tax cuts reduced revenue rather significantly.
W styczniu 2020 roku Wielka Brytania formalnie opuściła Unię Europejską. Oczekiwane korzyści z brexitu, poza odzyskaniem suwerenności w zakresie kształtowania prawa i zewnętrznych relacji gospodarczych, jednak się nie zmaterializowały. Widoczny jest natomiast spadek wydajności i konkurencyjności brytyjskiej gospodarki, co wpływa także na kondycję rynku pracy.
