I was looking at Clinton’s budget for 1 year (FY97, IIRC), and there was far fewer revenue from income taxes than a Bush budget 10 years later.
Do people evade income taxes more if they’re above a certain level? How much more? Or did people simply earn more when Bush was president?
If the former is the case, then why did Clinton make taxes super-high?
I know that a low tarriff can bring in more revenue than a high tarriff, but I don’t know if it works like that with income taxes.
In my opinion, it is very unlikely that reductions in tax rates cause increase in revenue in the short run. Thomas E. Woods Jr. has claimed that something like this did indeed happen in 1920s, when top income rates were reducec dramatically and simultaneously government could reduce public debt by one third.
But let’s take a look at the figures you presented. Here are government personal income revenues 1996-2009.
656.4
737.5 (1997)
828.6
879.5
1004.5 (2000)
994.3
858.3
793.7
809.0
927.2 (2005)
1043.9
1163.5 (2007)
1145.7
915.3
As you see, it is pretty unfair to compare fiscal years 2007 and 2007, because year 2007 was the top of Bush’s economic boom, and caused lots of extra revenue due to stock market boom. In this sense, comparing years 2000 and 2007 would be more fair and you would notice that revenue has increased only 15.9 % and if you use the CPI deflator, the real revenue has actually decreased by 4 %. Or if you take similar years 1997 and 2005, the real revenue has increased only by 3 %, which is most likely less than it would have increased if the rates had been kept intact.
It’s called inflation.
Yes.
We don’t know.
This is true.
Because in the short term, some tax increases can increase revenue.
Are you perhaps referring to the Laffer Curve?
If so,
According to the Laffer Curve, the answer to your question is yes…and no. A 0% income tax will bring in 0$ likewise a 100% income tax will bring in 0$, so the optimal rate is obviously between 0% and 100%. However, that is when it gets tricky. If the income tax is higher than optimal, then yes, lowering it will increase revenue; however, if the income tax is lower than optimal, lowering it decrease revenue.
Right, if decreasing taxes increases revenue, the tax was too high…
An outrageous criterion from the perspective of individual freedom!
Since when are we to support tax rates that increase revenue for the government?
The Laffer Curve is basically nonsense. Whatever this “optimal” point is, it is obvious that it can never be constant. It is meaningless to try to conceive of some “optimal” point for the long run or short run. The whole thing is purely mystical.
To be clear I don’t support taxes or increasing revenue for the state. But if the statist’s reason for a tax is to raise revenue, and decreasing the tax increases revenue, then clearly the tax was too high for this purpose. I realize that most any tax is immoral from the perspective of a voluntaryist.
Please point out where I said that I supported tax rates which increased revenue for the government. I was trying to objectively answer a question, not advocate the income tax, or any other tax for that matter.
If my post was written in a way in which this is not apparent, then I apologize.
Isn’t this what has been postulated by the Laffer Curve?
Rothbard proposed an interesting experiment: to try to raise the income tax and see if revenue falls off.