Larry Kudlow, host, CNBC's The Kudlow Report:
"Personal income tax of 15-20%, business, sales tax rate of 8-10%." ... "Maybe it's a range of 35-40%, it seems like that worked pretty well. If you started encroaching on 50, that would cause trouble...."
Dynamic Scoring: A Back-of-the-Envelope Guide - Gregory Mankiw and Matthew Weinzierl, December 12, 2005
For the canonical parameter values we have been using, the present-value feedback of a capital tax cut is 32.4 percent, compared to a steady-state feedback of 50 percent. The present-value feedback of a labor tax cut is 14.7 percent, compared to a steady-state feedback of 16.7 percent.
In a 2006 article published in the Journal of Public Economics, economist Greg Mankiw, who chaired the Council of Economic Advisers during Bush’s first term, estimated the long-run revenue feedback from a cut in capital taxes at 32.4 percent and 14.7 percent for a cut in labor taxes. [Bartlett]
Analyzing the Economic and Budgetary Effects of a 10 Percent Cut in Income Tax Rates - CBO, December 1, 2005
The budgetary impact of the economic changes was estimated to offset between 1 percent and 22 percent of the revenue loss from the tax cut over the first five years and add as much as 5 percent to that loss or offset as much as 32 percent of it over the second five years.
A 2005 Congressional Budget Office study during the time that Republican Doug Holtz-Eakin was CBO director concluded that a 10 percent cut in federal income tax rates would recoup at most 28 percent of the static revenue loss over 10 years. And this estimate assumes that taxpayers have unlimited foresight and know that taxes will be raised after 10 years to stabilize the debt/GDP ratio. Without foresight and no compensating tax increases or spending cuts, leading to an increase in the debt, feedback would be negative; i.e., causing the revenue loss to be larger than the static revenue loss. [Bartlett]
Specifically, Professors. Mankiw and Weinzierl calculated that 32.4 percent of the “static” or direct revenue loss of a capital-gains tax cut and 14.7 percent of the static revenue loss of a labor tax cut could be offset in present-value terms by additional growth, ignoring short-term Keynesian effects (i.e., any immediate stimulus provided to the economy).
The Congressional Budget Office, then headed by a Republican appointee, Douglas Holtz-Eakin, estimated that the economic effects of a 10 percent cut in income taxes would offset from 1 to 22 percent of the revenue loss in the first five years; in the following five years, the economic effects might offset up to 32 percent of the revenue loss, but might also add 5 percent to the revenue loss.
No, Gov. Pawlenty, Tax Cuts Don’t Pay for Themselves - Bruce Bartlett, June 17, 2011
This is not surprising given that no one in the Reagan administration ever claimed that his 1981 tax cut would pay for itself or that it did. Reagan economists Bill Niskanen and Martin Anderson have written extensively on this oft-repeated myth. Conservative economist Lawrence Lindsey made a thorough effort to calculate the feedback effect in his 1990 book, The Growth Experiment. He concluded that the behavioral and macroeconomic effects of the 1981 tax cut, resulting from both supply-side and demand-side effects, recouped about a third of the static revenue loss.
2004 Economic Report of the President
Then, if dynamic effects are considered, a capital tax cut reduces tax revenue in long-run equilibrium by half as much as a static analysis would indicate. [page 128]
Laffer Curve - IGM Economic Experts, June 26, 2012
Question A: A cut in federal income tax rates in the US right now would lead to higher GDP within five years than without the tax cut. [0% Strongly Agree, 35% Agree]
Question B: A cut in federal income tax rates in the US right now would raise taxable income enough so that the annual total tax revenue would be higher within five years than without the tax cut. [0% Strongly Agree, 0% Agree]