Stephen Moore Remains Blithely Detached from Reality: Tax Cut Impacts

From Swagel, “CBO’s Estimates of the 2017 Tax Act: Growth and Revenues” released today:

CBO’s April 2018 projections of revenues in 2018 and 2019 were remarkably
accurate.

Actual federal revenues in 2018 and 2019 were 99.8 percent and 99.2 percent of
the amounts that CBO projected. In other words, CBO was very slightly
overoptimistic about revenues in the years after enactment of the 2017 tax act,
and the agency’s revenue projection errors for those years were much smaller
than average.

Compare and contrast with Stephen Moore’s screed, in arguing that the OBBBA would jump-start the economy and tax revenues:

The CBO and JCT routinely overestimate revenue from tax-rate increases as well as losses from tax cuts. The most recent example is the CBO estimate of the 2017 Trump tax cut’s fiscal effects. Its prediction has proved almost $1.5 trillion too low so far.

The explanation for this persistent error is that the CBO’s and JCT’s computer models fail to take adequate account of how tax-rate changes affect the amount and timing of businesses’ and workers’ decisions—including how much to save, invest and work. Higher tax rates also lead to more tax-avoidance strategies. Imagine how many decisions you would make differently if your income-tax rate rose from 20% to 50%.

Though the modelers now do some dynamic scoring, even this insufficiently accounts for the macroeconomic effects of lower taxes on growth.

I guess the pandemic, high inflation, and the immigration surge in the intervening years don’t have anything to do with what revenues did.

Remember, Moore is the guy who thought the Rich States/Poor States Economic Outlook index had any predictive power, that a boom was in the offing in March 2020, lauded the Brownback boom for Kansas, and so many other wrong things.

 

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