orb@whuxl.UUCP (SEVENER) (11/22/85)
I concede victory, Dave. Indeed, as your figures indubitably show, in fact federal income tax receipts did *INDEED* decline. Underneath your figures I place figures with very rough corrections for inflation of 8% in 1980 and 5% for years thereafter. Actually this is a *conservative* estimate as I believe the inflation rate has in fact been higher during those years. Therefore the actual declines in revenue are even *worse* than these admittedly very rough estimates: > Dave's figures from Budget Office: > Year 1980 1981 1982 1983 1984 1985 > Individual Income Tax > (in $billions) 244.1 285.9 297.7 288.9 296.2 329.7(est.) inflation adjusted 244.1 264 261 241 235 249 There are several points of importance here. First is to note that *even the raw figures* practically show a decline in revenues. Second, is that even with the big jump in revenues projected for 1985, that the total revenues adjusted for inflation are still *LESS* than in 1981 before the tax cuts. Also I believe that there were some adjustments made to increase taxes in 1984 due to the massive deficits. Therefore the low figures for 1985 would have been even lower without slight tax increases. Finally as I have mentioned before one should really compare the actual revenues received with the tax cuts, with projected revenues at the old tax rates. This is not easy to do since supply-side theory predicts that taxable income will rise, thereby raising revenues based on that income. However if we cannot easily simply apply the old tax rates to the taxable income actually generated after the tax cuts we can project what the tax revenues would likely have been without the tax cuts by looking at previous years. In this case we find that tax revenues did *indeed* rise from 1980 to 1981, even adjusting for an inflation rate of 8% (from $244 to $264 billion). We could probably project that *without the 1981 tax cuts* that revenues would also have increased from 1981 to 1982. It is hard to be sure that this would actually be valid without doing a sophisticated econometric model of the economic conditions in these years and controlling for them. Sine 1981 was a recession year, it would probably have been a problem in any case since high rates of unemployment decrease overall income while concommitantly increasing government spending for unemployment benefits and welfare. However I now have total confidence, thanks to Dave's excellent research, in saying that the 1981 tax cuts reduced federal revenues and increased the deficits every year thereafter. The increases in the deficits caused by the fiscal irresponsibility of buying a trillion dollars of preparations for War while also reducing the revenues with which to pay for them were so huge that the resultant increases simply in *interest* on the national debt were greater than all of Reagan's cuts in social spending. I think George Bush described it best in the 1980 primaries: "Increase military spending, decrease taxes AND balance the budget? that's VOODOO ECONOMICS!" That's all I have to say on this topic. I concede victory. tim sevener whuxn!orb