Mitt Romney said in his first debate with Obama that he wasn't going to reduce taxes. Obama seemed surprised. We thought he was running on this platform. I suppose what he meant was, yeah, he'll reduce tax rates. But since the economy will grow so much now that investors have additional money they can use to purchase capital, this will stimulate the economy. Everyone will get so much richer that the net effect will be additional tax revenues.
Back in the Reagan days maybe it made sense to believe that kind of thing. We didn't have a lot of data to evaluate it. Seems sort of plausible. But the data are now in. As I've discussed before the data make it pretty clear that the "have your cake and eat it to" theory just doesn't hold up. Economic growth is lower in the periods of our history that correspond with lower tax rates on the rich. Tax revenue increases also decline. The Reagan and Bush tax cuts show that there isn't good reason to buy what Romney is selling. Like Bush and Reagan we should probably expect not only poorer economic performance, but an explosion of the federal debt.
A recent study by the Congressional Research Service confirms this, as if it wasn't already obvious. Not only do lower taxes on the wealthy correlate to poorer economic performance, it also correlates to expanded inequality and all of its associated problems.
What was frustrating to me about watching the first presidential debate (I haven't yet watched the others) is that Romney is saying the kind of thing that only a paid stooge of a right wing think tank could believe. And yet Obama just let it go unchallenged, as if it wasn't a huge steaming pile of crap. Romney's assertions on how tax cuts spur the economy are not unlike his beliefs about magic underwear. In polite company we pretend that this isn't outlandish. Magic underwear I can understand. He's not hurting anybody with that. But tax policy affects people, and these myths Romney is peddling will affect the poor negatively if they are implemented.