Thursday, March 28, 2024
46.0°F

TAX CUTS: Deficit goes up

| September 19, 2018 1:00 AM

Republicans claim that tax cuts increase federal government revenue, but they cite only a few questionable examples to support their view. In a thorough examination of fiscal history, U.S. Treasury studies estimated the revenue effects of major tax bills signed into law from 1940 through 2012.*

During these 73 years, 15 bills raised taxes and increased federal government revenue. Twenty-two bills cut taxes and decreased federal government revenue. Only one war time tax increase (1944) resulted in lower revenue. Only one tax cut (1986) resulted in higher revenue.

No wonder revenue has been insufficient to cover federal government expenditures. Now we are facing the consequences of the 2017 Republican tax cut that also lowered revenue and boosted the 2018 budget deficit to about $1 trillion. The accumulation of these annual budget deficits has increased gross federal debt from $51 billion in 1940 to an estimated $21 trillion in 2018. Nevertheless, Republicans keep repeating the same mantra in favor of misguided tax cuts.

CRAIG R. MacPHEE

Coeur d’Alene

(Mr. MacPhee is Emeritus Professor of Economics, University of Nebraska-Lincoln.)

* Jerry Tempalski, Revenue Effects of Major Tax Bills, Working Paper 81 (Revised September 2006), Office of Tax Analysis, United States Department of the Treasury. Updated Tables for all 2012 Bills (February 2013)