Republican presidential hopeful Rick Perry released his tax plan this week, and it’s a doozy. The Texas governor wants a flat tax, the elimination of the Estate Tax, and the elimination of the capital-gains tax. All of these measures, of course, would cost an enormous amount of money, and all of them would exclusively benefit the very wealthy.
At the same time, though, Perry believes he can slash taxes on the rich while also eliminating the deficit and balancing the budget. I seem to recall another dimwitted Texas governor making the same promise about a decade ago.
And how, pray tell, does Perry intend to collect more revenue by collecting less revenue? The governor’s campaign provided Suzy Khimm with an explanation. From the Perry camp:
“The purpose of this bold tax proposal is to give the economy the jumpstart it needs to get people back to work. The flat tax system has been designed to raise total federal revenues equal to 18 percent of GDP, the 50-year historical average for tax revenue in the U.S. Gov. Perry is confident that the economic growth that results from this plan will generate the necessary revenue to balance the budget by 2020.”
Yes, Perry is apparently a member of the Tax Fairy Fan Club. If you cut taxes, the argument goes, the economy will soar, more people will get better jobs, they’ll start paying taxes on their income, and voila, more revenue enters the treasury. As far as the governor’s campaign is concerned, they’re “confident” that massive tax giveaways to millionaires and billionaires will simply pay for themselves.
And if the oft-confused Texas governor is confident, who are we to question him?
Look, this truly absurd argument comes up fairly regularly, but it’s deeply foolish. Earlier this year, Amanda Terkel noted that actual economists, even conservative ones, have no use for this nonsense.
“Federal revenue is lower today than it would have been without the tax cuts. There’s really no dispute among economists about that,” said Alan D. Viard, a former White House economist under George W. Bush, in a 2006 Washington Post article.
Robert Carroll, deputy assistant Treasury secretary for tax analysis, also said that no one in the administration believes tax cuts created a surge in revenue. “As a matter of principle, we do not think tax cuts pay for themselves,” Carroll said.
Bruce Bartlett, a Reagan economist who became a strong critic of the Bush administration’s policies, used data from the Office of Management and Budget in a blog post last year to illustrate how “the Bush tax cuts reduced revenue rather significantly.”
Republicans like Perry aren’t just wrong about this; they’re pathologically confused. The evidence isn’t ambiguous in the slightest. The idea is just crazy.