Liberals claim that tax cuts don’t “trickle down” and increase economic growth.
They also claim that tax cuts don’t increase tax revenue.
However, they are wrong on both counts.
The term “trickle-down” economics is a term meant to dismiss policies intended to cut business and income taxes to grow the economy.
Liberals have tried to rewrite history to peg President Ronald Reagan’s tax cuts as a failure.
That is absurd.
With all due respect to President Trump’s efforts, Reagan actually signed into law the largest tax cuts in American history, and it isn’t even close.
Reagan was able to successfully get the income tax brackets down to three, with the top-marginal rate reduced to 28%.
The economic growth that followed was staggering.
Reagan inherited the worst economy since the Great Depression. Inflation in the 70s and early 80s was in the double digits. There were gas shortages and long unemployment lines.
Americans were not optimistic about their futures.
Then Ronald Regan became president, and things changed.
Reagan pushed the theory of economist Art Laffer, who argued that the more you cut taxes, the more the economy and tax revenue would grow. Reagan displayed the theory in chart form, and that graph was dubbed the “Laffer Curve.”
The “Gipper” was dismissed as a naïve prognosticator whose plan was full of rainbows and pixie dust.
However, Reagan would have the last laugh.
From November 1982 to November 1989, 18.7 million new jobs were created.
It was the greatest consistent expansion of economic growth in not just U.S. history, but in world history as well.
That is not an exaggeration.
In 1990, Martin Anderson wrote in the pages of The New York Times that “Never before had so many jobs been created during a comparable time period. The new jobs covered the entire spectrum of work… Total employment grew to 119.5 million.”
That growth continued for over a decade after Reagan left office.
The Laffer Curve was correct in predicting that tax revenue would increase as a result of the economic expansion.
From 1984 to the end of Reagan’s presidency in 1989, tax revenues increased every year, going from $298 billion in 1984 to $445 billion in 1989.
President Trump made a similar argument when he signed into a law a tax cut on income and corporations in 2017.
Like Reagan, Trump was laughed out of town.
However, like Reagan, Trump has had the last laugh to this point.
When Trump took office, liberals claimed that we could never hit 3-4% GDP growth again and that we were living in a “new normal” economic period.
Trump has proven them wrong.
The economy and stock market have been growing and tax revenue has increased, contrary to doomsday predictions by the Left.
In 2016, income tax receipts stood at $1.7 trillion. In 2017 tax receipts grew to $1.8 trillion and in 2018—after the tax cut—tax revenue on individual income grew to $1. 9 trillion.
Trickle-down economics works and the numbers prove this.
The data doesn’t lie.