Talk:Tax cut

Tax cut vs tax RATE cuts

The article mostly defines tax cuts as reducing revenue, but veers off into a discussion of how cutting tax rates often leads to increasing revenue. I propose using a clearer term like Tax rate cuts. Uncle Ed (talk) 17:33, 9 December 2024 (UTC)

Tax cuts seen as BOOSTING tax revenue

• There are many case studies that demonstrate the seemingly paradoxical effect on federal tax revenues after major tax legislation lowers or maintains reasonable tax rates -- i.e., that such changes much more often than not lead to enhanced, not impaired, revenues. Examples would include the Calvin Coolidge cuts in the 1920s, the John F. Kennedy cuts in the 1960s, the Ronald Reagan cuts in the 1980s, the George W. Bush cuts in the 1990s, and the 2017 Donald Trump tax cuts.

There is a long-running controversy between those who want to increase tax rates (principally on "the rich") with the aim of making them pay "their fair share" and/or with the goal of boosting gov't revenue. The argument is that if the tax rate goes up, the rich will pay more taxes. This assumes that the taxed thing or activity undergoes no change in response to the changed tax rate (see Elasticity (economics).

Others like Arthur Laffer say that often tax rates have been set too high - so high that reducing the RATE will increase the REVENUE (see Laffer curve).

I could use some help describing the controversy. I don't just want to post random quotes supporting tax cuts. --Uncle Ed (talk) 22:21, 31 October 2025 (UTC)

Since you link to the article on the Laffer curve, you could try reading it as well. The empirical data does not support Laffer's theory concerning the effects of tax cuts: "Writing in 2010, John Quiggin said, "To the extent that there was an economic response to the Reagan tax cuts, and to those of George W. Bush twenty years later, it seems largely to have been a Keynesian demand-side response, to be expected when governments provide households with additional net income in the context of a depressed economy." ... "Some have also cited Hauser's Law, which postulates that US federal revenues, as a percentage of GDP, have remained stable at approximately 19.5% over the period 1950 to 2007 despite changes in marginal tax rates over the same period." ... "Generally, among other criticisms, the Laffer curve has been scrutinised as intangible and inapplicable in the real world, i. e. in a real national economy. On the contrary, diligent application of the Laffer curve in the past has actually led to controversial outcomes. Since its proposal, there have been several real-life trials of modelling the Laffer curve and its consequent application, which have resulted in the finding that tax rates, which are actually utilised by the governing body, are to the left of the Laffer curve turning point, which would maximise tax revenue. More significantly, the result of several experiments, which tried to adjust the tax rate to the one proposed by the Laffer curve model, resulted in a significant decrease in national tax revenue - lowering the economy's tax rate led to an increase in the government budget deficit. The occurrence of this phenomenon is most famously attributed to the Reagan administration (1981–1989), during which the government deficit increased by approx. $2 trillion." Dimadick (talk) 06:54, 1 November 2025 (UTC)