If tax cuts are to raise revenues, broader culture of economic freedom is required

Among the favorite maxims of fiscal conservatives is the idea that tax cuts, not hikes, increase revenues. Inarguably, slashing personal income tax rates buoyed the size of the federal government’s coffers following the Mellon income tax cuts of the 1920s, the 1964 Revenue Act signed by President Kennedy and President Reagan’s reform measures in 1981 and 1986. The rationale behind this somewhat counterintuitive phenomenon is that lower tax rates leave individuals and sole-proprietor businesses with…

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