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Sunday, December 28, 2014

'Federal Tax Revenues During the 1980’s'

PGL at Econospeak:

Federal Tax Revenues During the 1980’s: Paul Krugman takes on another aspect with respect to the latest intellectual garbage from Stephen Moore by commenting on Moore’s claim that Federal tax revenues soared from 1980 to 1989...

Paul is debunking a claim that has been made and debunked many times. The usual line is that Federal tax revenues almost doubled from $517.1 billion in 1980 to $1032.0 in 1990. The inflation-adjusted part comes from the fact that the GDP deflator rose by 50.3% over this period so in real terms revenues rose by 32.8% over the entire decade. But there is another serious problem with this that anyone who followed the various tax policy changes during the Reagan years should know. Yes income tax rates were cut in 1981 but there were various tax rate increases that followed including a significant increase in payroll tax rates in 1983. Table B.21 of the Economic Report of the President provides the details on Federal tax revenues. Payroll taxes rose from $157.8 billion in 1980 to $380 billion in 1990. Yes, a 140.8% nominal increase and a 60.3% increase in real terms when this tax rate was increased. All other Federal taxes therefore rose by only 20.8% in real terms over the decade. Since I’m not the first to point this out one would have to believe that Stephen Moore would have seen this often made point before. And yet he can’t be bothered to tell his readers the whole story? ...

    Posted by on Sunday, December 28, 2014 at 09:03 AM in Economics | Permalink  Comments (41)


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