Tax Cuts Do Not Add to the Treasury

The other day Vice President Cheney said before a group of conservatives: "The evidence is in, it's time for everyone to admit that sensible tax cuts increase economic growth, and add to the federal treasury." This Washington Post editorial reiterates what most analysts and economists know to be true: tax cuts do not magically pay for themselves, and they do not add revenue to the Tresasury. In fact, no economist has come up with the proof that the adminstration wants -- that tax cuts pay for themselves. In fact, as the Post says, "during the tenure of a fan of dynamic analysis, former White House economist Douglas Holtz-Eakin -- used a variety of different dynamic models and found only small economic effects from the president's tax cuts, a majority of them negative."
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