Romney, as Reagan Did, Has It Right on Cutting Taxes | Alan Reynolds | Cato Institute: Commentary

Romney, as Reagan Did, Has It Right on Cutting Taxes | Alan Reynolds | Cato Institute: Commentary: "Presidential candidate Mitt Romney wants to cut all marginal tax rates by 20%. Vice President Joe Biden, in the debate with Paul Ryan, emphatically repeated that, "it has never been done before."

Yet President Kennedy cut all tax rates by 22% in 1964, and President Reagan cut them by another 19% to 22% by mid-1983. The 1986 Tax Reform Act then cut the top rate to 28% in 1988-90."

"Aside from booms and busts, the individual income tax always brought in about 8% of GDP regardless whether the top tax rate was 91% or 28%."

"The reason individual tax revenues remained above 8% of GDP as top tax rates fell from 91% to 28% is that high-income taxpayers earn and report more income when marginal tax rates come down. Economists call this the "elasticity of taxable income," and the response is powerful in high tax brackets."