TAX CUT REVENUE REWARDS

Many in the Washington establishment were surprised when CBO (Congressional Budget Office) reported a surge of anticipated tax receipts that will sharply reduce this year's deficit. Of course, those who had been proclaiming the Bush tax cuts would result in big reduction of tax revenues tried to hide their disappointment. In fact, every member of the Congress can clearly understand the pure structure of tax reduction with by lowering impediments to work, save and invest which leads to more explosive economic growth. Bigger economic pie inevitably leads to an increase of tax revenue. Read Richard W. Rahn's Commentary to see the whole explanation of this:

The latest major tax rate reductions were enacted in 2003, and the first three-year results are now in. The increase in tax revenues, as in the previous two experiments, has far outstripped inflation, and the economy is close to full employment. The economy was already falling into recession when George W. Bush took office, and he made the mistake then of giving small tax rebates (which had no positive economic effects) rather than cutting marginal tax rates on labor and capital as he did in the bigger tax cut of 2003. The question is always asked, did the "tax cuts pay for themselves?" If, by "paying for themselves," one means more tax revenue was produced for the government after several years than otherwise would have occurred, we can provide a reasonably certain answer. As noted above, the Kennedy tax cuts led to a very high rate of economic growth and no reduction in tax revenue as a percent of gross domestic product (GDP) over the period (average of 17.6 percent). Therefore, with a very high degree of confidence, we can say the Kennedy rate cuts paid for themselves in three years.