Ed Feulner at Fox News explains why it is that cutting some taxes actually increases the tax revenue flowing into the national treasury:
[W]hen the government cuts confiscatory tax rates, people tend to work more, save more and invest more. That improves the economy, which means tax collections can also increase. Lower tax rates also improve compliance since people have less incentive to avoid and evade the IRS.
Problem is, Congress doesn't count these "supply-side" benefits of lower tax rates. Instead, before lawmakers vote on a spending or taxation bill, they give it to the Joint Committee on Taxation. The JCT is supposed to "score" it, or explain what the revenue effects of the legislation will be.
If the bill calls for a tax cut of, say, $100 billion over 10 years, the JCT generally subtracts $100 billion from its revenue predictions. But this approach simply doesn't work, because it ignores the fact that certain types of tax cuts -- such as lower tax rates -- tend to boost the entire economy.
Remember the 2004 American Jobs Creation Act? When lawmakers were debating that bill, the JCT guessed the entire tax cut package would cost some $4.5 billion in its first year. That was off by just a bit. In fact, the change brought in an additional $16 billion in the first year.
Feulner's reasoning throughout the rest of the article is unassailable and one would think that liberals and other left-minded folk would embrace the idea of cutting taxes since what they want, presumably, is for the government to have more money to spend on the programs they promote. Nevertheless, the left almost always opposes tax cuts, which leads one to wonder whether they really want more revenue flowing into the treasury or whether they simply want to punish people in upper income brackets by taking as much of their wealth as they can.
The only other possibility is that, despite the lessons of history which teach that every time taxes have been cut revenues grow, liberals just don't believe that tax cuts work. If you know someone like that, forward them Feulner's article.
