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The "Laffer Curve" has been widely discredited by economists across the political spectrum. Tax revenues in the year after the the Trump tax cuts (the Tax Cuts
by whakim 5y ago
The "Laffer Curve" has been widely discredited by economists across the political spectrum.
Tax revenues in the year after the the Trump tax cuts (the Tax Cuts and Jobs Act) did indeed rise (FY2018). That being said, much of that was attributable to economic growth and inflation. The real question is what would revenue have been had the TCJA not been passed? It's obviously impossible to answer a counterfactual, but the Congressional Budget Office's predictions for 2018 taxes - made before the tax cuts were passed - were $276bn higher than actual receipts. These predictions ended up being pretty close to accurate for types of taxes that weren't affected by the TCJA, so it's a good ballpark.
- adam_arthur 5y agoI agree that revenues almost certainly would have been higher without the cuts, but still pretty amazing that it seemed to only pull one year of growth from trend. To be honest, I would have expected a much bigger decline
- whakim 5y agoI understand where you're coming from, but $276bn is a pretty substantial amount of money though! I think it's also worth noting that this outcome (revenue would increase due to expected economic growth, but would end up lower than in the no-tax-cuts scenario) was correctly predicted by most of the organizations that studied the impact of the legislation.