I can't verify the number, but it is in synch with something that I heard on the radio recently. It was on either the Laura or the Rush show. The $60 billion that Bush supposedly lost was again, projected. The main area of change was in capital gains taxes. Sluggish economy translated into less investment which, in turn, translated into less tax revenue. This issue wasn't ever explained well by the Dems because they always want to increase capital gains taxes. The caue and effect evident here was something that they wanted to aviod making an issue of. Now that the economy is turning around and the Bush tax cuts are in effect, capital gains are up again, resulting in greater tax revenue for capital gains taxes. As you pointed out, it all goes back to the very real Laffer Curve.

I agree that the Laffer Curve is real; however, this story does not necessarily demonstrate that. I tend to think overall revenues are up for reasons unreleated to the tax cut, in which case revenues are actually down, relative to where they would be if the tax rates had been left alone.

Note that this is not an argument against the tax cut, which I support. It is an argument against cutting taxes for the specific purpose of increasing revenue. That only works when rates are so obscenely high as to put us on the right (downhill) side of the Laffer Curve. The astronomical pre-Kennedy marginal rate of ~90% was clearly in that territory, as was the pre-Reagan rate (~70%). Today's more modest rates (~40% at the end of the Clinton Administration) probably are not.

Without seeing the exact figures and where those increases in revenue came from, I would be hard pressed to agree or disagree. I do think, though, that the tax cuts left more money in the economy than would otherwise have been there, stimulating spending and investment.

I also happen to think that the sweet spot on the laffer curve is well below 40%, although returns for cuts below that point are obviously going to be less than returns for cuts from higher rates.

I think the Laffer Curve needs to be considered with respect to the total tax burden. And since most American taxpayers are still paying close to 50% of their income in various taxes (not even taking into account the indirect costs of regulation and red tape, which boosts it into the stratosphere), we're definitely still on the side of the curve where tax cuts should be beneficial to the economy and therefore to revenue.

Good point. I was actually trying to figure out how I could possibly calculate my own true taxes--you, know, everything from the obvious deductions on my pay stub to gas tax to license fees to "sin tax" on my liquor. I realized, though, that I don't even know where all the money is taken from me. I have no idea where to even get the information, but it really does start to add up.

One of the worst things about all the hidden taxes, in fact, is that they are hidden. Most people think they are just buying a bottle of vodka without any consideration of just how much of that vodka's cost is actually going to the government. If they knew where all there money was going, they would likely be outraged.

I don't think the total rate makes much of a difference. The marginal rate is the one that is most directly impacted, by far. If that performance-based year-end bonus is taxed at a rate of 70% or 90%, then few people are going to expend the extra effort needed to earn it. The possibility that the base salary, already earned, was taxed at a lower rate (or not even taxed at all) does not enter into the equation.