Tax Cuts Work Yet Again

It's long been an article of faith among conservatives that tax cuts actually increase tax revenues by spurring economic activity, and thus generating new tax receipts. Actually it's not based on faith at all, but on documented evidence dating back to JFK's tax cuts in the 60's. The Dems (and liberal Republicans) have never understood that concept (despite the fact that it's worked every times it has been tried) and think they can tax the country to prosperity. That, of course, is nonsense.

R. Emmett Tyrrell Jr. writes a piece today at the American Spectator which shows that once again tax cuts have worked, and the extension of Bush's tax cuts will continue the growth in revenues:

Those of us who favor tax cuts can now look proudly at the recent record of tax payments. According to the Treasury Department's monthly report, tax receipts were up 11.2 percent for the first seven months of Fiscal 2006. That is $137 billion. In Fiscal 2005 tax receipts were up 14.6 percent, which is $274 billion. These increases come as a great surprise to those Democrats and Republicans who insist tax cuts cause deficits. Holed up over at the Congressional Budget Office (CBO), their minions issue predictions of puny revenue growth following tax cuts that are always gloomy and always wrong. The CBO's recent predictions for Fiscal 2006 were $76 billion for the whole year for individual tax receipts and $24 billion for corporate receipts. Seven months into the year the respective figures are already $56 billion and $40 billion.

Unburdened by high taxes, the rich paid more in taxes. By lowering marginal tax rates we have encouraged economic vigor and put more money in the government's hands. This we call Supply-Side Economics. Yet many Republicans remain agnostic and many more Democrats are contemptuous of it. This is a cultural problem. In the culture of economic ideas many on Capitol Hill will not look at the evidence of the past two decades. They are living in an era of great prosperity and do not know how they arrived at it.

I'm sure much of the problem with Washington nonbelievers is the culture of taxation, spending and entitlement that exists back there. Last July I vacationed in Washington, and I remember looking around at all those federal buildings housing thousands and thousands of government workers and wondering what in the world all those people are doing for the billions of tax dollars we send to Washington each year? I bet we could fire half of them tomorrow and not see a significant diminishment in government services.

If you live in a district represented by a Democrat or one of these agnostic Republicans, email them this article and remind them that if they want to fund all their little projects, tax cuts work every time they're tried.