Regular readers know that I’m a big advocate of the Laffer Curve, which is the common-sense notion that higher tax rates will cause people to change their behavior in ways that reduce taxable income.
But that doesn’t mean “all tax cuts pay for themselves.” Yes, that happened when Reagan lowered tax rates on the “rich” in the 1980s, but there are also tax cuts that generate little or no revenue feedback.
The key thing to understand is that revenue feedback is driven by the degree to which a tax cut leads to more taxable income. And you tend to get bigger changes in taxable income when you lower rates on taxpayers who have considerable control over the timing, level, and composition of their income.
Who are those taxpayers?
Most of us don’t fall in that category. Cutting my tax rate, for instance, probably won’t have much impact…
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Utopia, you are standing in it! 
Mar 27, 2015 @ 19:52:09
no it didn’t happen under Reagan. it is one of the great reasons why deficits ballooned under him.
It occurred again under Bush Junior
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