Brian Domitrovic has a new piece over at Forbes.com, and you won’t want to miss it:
Laffer’s idea was a fudge, though—right? This idea of counting revenue from state and local places after a federal tax cut is some sort of snake oil, a trick too-clever-by-half to cover up the hole blown in the federal balance sheet by the tax cut—surely.
Except this was the way everyone, Democrats above all, always talked about tax cuts. In 1963, as President John F. Kennedy was shopping his tax cut (which Kemp-Roth would emulate), its supporters pointed to the wonderful results it would bring to the states and the localities.
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All in the archives, again, ink on paper, “Board of Revenue Estimates” stationery in fact. The dismissal of the Laffer curve on the grounds of the evidence of the 1980s is weird enough. Government revenues did go up, and too much in fact, after the tax cuts.
Now it emerges that the record of tax cuts before Reagan’s has been obscured. One of the reasons Laffer’s argument about the states got minimal citations is that everybody blew off the fact that Democrats had traditionally made these arguments in favor of their own tax cuts.
The Pillars of Reaganomics is the first of several volumes that will make it passing easy to cite real sources in the history of supply-side economics. Here they are, published. And any prospects we have for productive fiscal and monetary reform can only be enhanced by sharper historical understanding.