Background and Links to Other Discussions of the Tax Cut Issue

According to the New York Times ("Despite Cuts and Increases, Taxes Stay About the Same," by Louis Uchitelle, NYT Tuesday, Aug. 6, 1996, p. A 12) "Since the Mid-1960's, the revenue from Federal taxes -- individual and corporate income taxes, Social Security and Medicare taxes, gasoline and cigarette taxes, and half a dozen others -- has never fallen below 17.2 percent of national income nor risen higher than 19.8%. When one tax goes down, another goes up. And the Dole proposals, if they were all to become law, would not break the bounds." The range from 17.2% to 19.8% is just over a 15% range. You may judge for yourself whether tax rates in that range "stay about the same." Uchitelle goes on "Federal taxes of all sorts collected this year will come to 19.1 percent of the national income."

Proposals for tax cuts are far from new in American politics. The Atlantic Monthly web site has links to a number of their articles they have published on the subject over the years. Tax cut proposals were already a big issue in 1945, and the Republican Congress passed a tax cut bill in 1948 (Herbert Stein, "We Can't Afford Voodoo 2," New York Times Op-Ed, Feb. 7, 1996) . A proposal for a constitutional amendment to limit federal tax rates to 25% was discussed in 1939 and was still under discussion in 1952. In the 1950's, a Republican faction led by Senator Warren Knowles called for tax cuts, but President Eisenhower opposed them as fiscally unsound. The Kennedy-Johnson administration cut tax rates substantially in 1963, at a time when the maximum rate had been 91%, although there were so many "loopholes" that hardly anyone paid that much. In 1981, of course, the new Reagan administration made tax cuts a central part of its economic strategy. A key figure in the political maneuvering was David Stockman, a Republican ex-Congressman with strong conservative convictions. An article in The Atlantic tells about the political maneuvering that brought this about. This initiative had been opposed by the federal reserve system.

These links were collected by an Alta Vista search on August 17, 1996, (updated Dec. 30, 1997) and may or may not be "live" when you read this. As well as the Federal Reserve essay mentioned above, which was published in print in 1979, I found Berkeley economist's case against a capital gains tax cut. In twenty pages of search references I did not find a case for a supply side tax cut by an economist, a fact that seems to reflect a remarkably broad consensus among economists that the idea is not practical.

A conservative organization and a newspaper columnist did offer representative cases for the proposal, I felt. Citizens for Tax Justice, which can probably be called a liberal organization, presented a representative (non-economist's) case against it.

More Supply Side