Was there more revenue (i.e. more dollars)being collected after the Reagan cuts were implemented?
“Was there more revenue (i.e. more dollars)being collected after the Reagan cuts were implemented?”
To look at the broadest case, if you subtract the total tax revenues of 1981 from the total tax revenues of 1989 you will see a large increase (this is a commonly employed technique for a number of our radio conservatives).
The problem is that this isn’t a valid method of determining the role of the rate cuts in generating that revenue. You have to account for other factors that increase total tax revenue, such as deficit spending, the business cycle, growth of the workforce, and so forth; it is a complex problem and this is the data that the Larry Lindsey study details in “The Growth Experiment”.
Once the other factors are subtracted out Lindsey found that economic growth recouped a large portion of the revenue lost through lower rates and it was essentially what the Reagan economists had predicted it would be. Around 60% if I recall correctly.
The tax rate cuts weren’t intended to increase the tax take for the Treasury. They were intended to shift the economy’s supply curve to the right, increasing the production possibility frontier, removing the constraints that were generating inflation during the ‘70s. They achieved what they were intended to do.
Those who think that the optimum tax rate for economic growth (the Reagan goal) is the same as the optimum rate for tax revenue (the Laffer Curve) make a common mistake of conflating two different curves. It is very likely that the optimum rate for total tax revenue is much higher than the optimum rate for economic growth. Which rate you choose just depends on what your goal is, a wealthy citizenry or a wealthy government.