This week, Pat Toomey will become a United States Senator from Pennsylvania. As a hint at the agenda that Toomey will pursue in Senate, this weekend, he declared, “there’s a lot of data and I think there’s a lot of evidence that less government leads to stronger economic growth.”
If there a lot of data that less government leads to stronger economic growth, where is it? It ought to be easy to find, but gosh, I haven’t been able to find any myself.
Can someone show me where that big amount of data is?
I have a question for you on a related topic.
In our local newspaper a letter to the editor said, “It has been demonstrated that tax revenues over the last 30 years have increased during periods when tax rates were decreased and vice versa. The most stark example of this phenomenon was illustrated by the Bill Clinton and George W. Bush capital gains tax reductions which resulted in increased revenue from these taxes despite lower rates.”
Is this at all true, or is another conservative simply making up facts? What really was the relationship between taxes and government revenue during this period? Is there clear cause and effect, or are there a host of other issues that come into play? Thanks for your insight.
Maybe J.Clifford can shine light here, but I can tell you I don’t know the answer, because it’s hard to know what the letter writer was asking. S/he was sometimes referring to capital gains taxes and sometimes referring to tax rates overall. There are also differences in the long-term and short-term capital gains tax rates, differences that the letter writer doesn’t account for.
Regarding capital gains taxes in particular, I know of a 1988 CBO study that concluded the effects of capital gains tax rates on revenue were curvilinear: particularly, up to a certain percentage point (in the twenties) increases in capital gains taxes increase revenue. Since the range of debate regards capital gains taxes either of 0%, 20% or in between, if you take the 1988 CBO study seriously then there wouldn’t be support for idea of cutting capital gains taxes to increase revenue.
Okay, so I see that no one is able to find any data supporting Pat Toomey’s claim.
I thought as much.