What is the biggest economic and political lie in our country’s history?
It’s probably the tale that tax cuts pay for themselves by increasing GDP growth. Like most lies told by politicians, there is a touch of truth to it. When hundreds of billions of dollars are pumped into consumers’ pockets with a tax cut, consumer spending, business activity, employment and business profits increase, increasing tax receipts. However, the taxes collected won’t increase enough in the long run to even come close to recovering the tax revenue lost in the first place.
The Republicans justify cutting taxes by pointing to the short-term increase in tax revenue and implying the tax cuts pay for themselves. But if tax cuts paid for themselves, our National Debt should not have increased anywhere near as much as it did under Reagan, Bush, and G. W. Bush. In fact, our National Debt should have decreased and we ought to be rolling in money if “stimulating” our economy with tax cuts significantly increased our GDP growth rate.