Another “dog bites man story.” This time it is Pete DuPont who does not feel constrained by a simple little thing called the truth.
LINKBrendan Nyhan calls him out.
Pete DuPont bangs the supply-side drum in dishonest Wall Street Journal Column
There appears to be some sort of unwritten rule that the Wall Street Journal has to publish supply-side nonsense like this every week or two:
So what are the facts? Did the tax rate reductions of the Bush administration spur or diminish economic growth? Grow or diminish federal tax revenues? Were they good or bad economic policy?
…The tax cuts have also produced substantial tax revenue increases–14.5% growth in 2005 and 11.7% in 2006. For the first seven months of the current fiscal year, total revenues were up 11.3% over last year, and individual income tax receipts were up by 17.5%. Total tax receipts in April were $70 billion higher than in April 2006.
The Congressional Budget Office and the Congressional Joint Tax Commission estimated that a reduction in the capital gains rate to 15% from 20%, which was passed in 2003, would cost the U.S. Treasury some $5.4 billion over three years. But actual revenues exceeded expectations by $133 billion, so the government profited substantially from our strong economy and the tax rate reduction. In fact, the tax cuts have actually expanded revenues as a percentage of gross domestic product. Over the past 40 years, federal tax receipts have accounted for 18.3% of GDP. That figure was 18.4% in 2006, and the CBO projects it at 18.6% in the current fiscal year.
These revenue increases have also had a positive impact on the federal deficit. Since the 2003 tax cuts the deficit has declined from $413 billion (3.5% of GDP) in fiscal 2004, to $318 billion in 2005, then $248 billion in 2006, and an estimated $150 billion to $200 billion (1.1% to 1.5% of GDP) in the current fiscal year.
Like Jerry Bowyer, however, Pete DuPont is measuring revenue growth from 2003 — the time of the second tax cut — while neglecting the fact that per-capita revenue growth in the current business cycle was “near zero” as of July 2006. Even Bush administration economists dispute the idea that tax cuts increase revenue. (For more, see this debunking of tax cut myths by the Center on Budget and Policy Priorities and my previous posts on the WSJ’s frequent suggestions that tax cuts increase revenue.)