The “Fiscal Wake-Up Tour” Visits Jacksonville, FL Today
May 19th, 2008 . by economistmom
My boss, Concord Coalition Executive Director, Bob Bixby (on the left in this photo), is in Jacksonville, Florida today, along with former Comptroller General David Walker (on the right in this photo), Paul Cullinan of Brookings, and Andrew Biggs of the American Enterprise Institute, for another stop on the “Fiscal Wake-Up Tour”. Click here to see the details of the event and bios of each of today’s tour members.
Besides the usual Tour town-hall meeting, this trip included a special showing of the movie I.O.U.S.A. at the Jacksonville Film Festival (last night…sorry I didn’t think to announce here earlier). (The photo is from a scene in the movie.) If you would like to learn more about I.O.U.S.A., which stars Bob Bixby and David Walker and has the Fiscal Wake-Up Tour as its centerpiece, please visit the movie’s website here. The documentary movie is expected to start showing in “selected theatres” by late summer.
Here’s a good press report on the Jacksonville stop of the Tour: PR Newswire story on Jacksonville trip.
In response to those claimng no studies showing that tax cuts can potentially pay for themselves.
http://www.heritage.org/Research/Taxes/bg1765.cfm
Jeffrey wrote:
In response to those claimng no studies showing that tax cuts can potentially pay for themselves.
(see link in prior message)
Thanks for posting that. I don’t know that I would call it a serious economic study but it is the the first paper that I’ve seen that explicitly states the belief that a tax cut could pay for itself. Somehow, I suspected that if there were such a paper, it would show up on the Heritage Foundation site and I’m not surprised that its author is Laffer himself.
Anyhow, I don’t really think it’s a serious economic study because it looks at very few hand-picked data points. I haven’t had time to look at the entire paper but I did look at the section on the Reagan tax cut as that is the one that I’m most familiar with. Laffer first explains how the tax cut was enacted in August of 1981 but that parts of it were phased in over the next two years. Hence, despite the fact that the top marginal rate of income taxes was immediately cut from 70 to 50 percent and the top marginal rate of capital gains was immediately cut from 28 to 20 percent, Laffer counts 1982 among the pre-taxcut years. Might this have been because 1982 was the last and worst year in a double-dip recession? You be the judge.
I then noticed that the Total Income Tax Revenue shown in Table 7 include both Personal and Corporate taxes. Why would Laffer include corporate income taxes when the tax cuts were only on personal income taxes? The Historical Tables in the last U.S. budget show that real personal income tax revenue bottomed in 1984 whereas table 7 shows the combined revenue bottomed in 1983. Hence, once again Laffer’s questionable choice helps to bolster his numbers.
Next I looked at the GDP numbers in table 7. They match the numbers from the Bureau of Economic Analysis (shown here). The real GDP growth from 1979 through 1982 was 3.2, -0.2, 2.5, and -1.9 percent for an average of 0.9 percent and the real GDP growth from 1983 through 1986 was 4.5, 7.2, 4.1, and 3.5 percent for an average of 4.8 percent. As can be seen from the prior link, it’s very fortunate that Laffer went back just 4 years since he would have picked up real GDP growth numbers of 5.6, 4.6, and 5.3, had he gone back 5, 6 and 7 years, respectively. Once again, his selection helped to bolster his numbers.
I make no claim that my analysis is of the type that you would find in an economic journal. However, I did at least look at as much of the data as possible. So thank you very much for posting the link to that paper and I will look at it further as I have time. However, I would suggest that you look for a paper that looks at all of the data, not a few hand-picked data points. If you should find one, please post it as well.