August 06, 2006
No Magic in Tax Cuts
Through selective use of information, Michael Wigley and William Cooper portray a world in which tax cuts magically result in increased government revenue and a million flowers bloom ("Tax cuts are benefiting our economy," July 23). Unfortunately, the real world is less rosy and more complicated than they would have us believe.
They are correct in noting that capital gains tax collections are up, but mistakenly, in my judgment, attribute the growth to tax cuts. Federal capital gains tax revenue increased more rapidly during the Clinton years -- when taxes were increased -- than in either the Reagan years or the present Bush years, when taxes were cut.
To simplistically link the growth in capital gains revenue to tax cuts seems to ignore the historical record. One needs to take into account a complex array of forces influencing capital gains tax collections.
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