Wednesday, June 22, 2011

Real per-capita government revenue growth: the last 38 years (or why trickle-down economics is a fallacy)

From Paul Krugman's blog, (real) per-capita government revenue growth seems to have done quite well under Democratic presidents, while substantially stalling under Republican presidents.

Starkly obvious, the period between 2000 and 2007 (which doesn't include the Recession of '08-'09), under control of Republicans in Congress and the White House, revenues plummeted.  No surprise there, given the Bush tax cuts of 2002 and 2004.  Under Reagan, the same is true: tax cuts and lower real revenue (the key here, is real revenue as opposed to nominal, so even though revenue increased quite a bit, so did inflation).

So to distill it down: tax cuts do not increase government revenue, as the trickle-down theory of Conservatives have oft repeated as fact.


1 comment:

Anonymous said...

"under control of Republicans in Congress and the White House, revenues plummeted"

Revenues did not plummet.
Revenues actually INCREASED.
The GROWTH in revenues plummeted.

Why should one care about per capita govt revenue growth?
We should only care about GDP growth.