Economics is one of the most riving fields among academics. While most "professionals" delude themselves that their labours contribute to some kind of science, the received view outside the field is largely opposite — that economics comprises a conjecturial wasteland of models and hypotheses for which real-world examples are seldom marshalled to effect the kind of consistent, rigorous, cause-and-effect proofing common to true sciences. Economics remains mired in proving interesting mathematical properties at the expense of whether a theory has a sound empirical basis. This is why economic posits that might be based in ideology but have no factual basis in reality — i.e., have not been or cannot be proven — are readily considered equal to those based on an empirical disproof of that same posit using real-world data. In other words, so fractious and ungrounded is economic discourse that the public is conditioned to accept mere opinion in the same light as sounder, fact-based policy.
Which brings us to the trumpeted but nonsensical enticements of tax cuts.
The argument that tax cuts create or increase revenue, and ergo pay for themselves, is an old myth that continues to be perpetuated in the service of neo-conservative ideology. The (il)logic goes like this: cutting taxes stimulates spending and investment, and thus GDP growth, resulting in increased tax revenues that more than offset those lost through the lowered tax rate. (The inverse corollary is that increasing taxes lowers tax revenue by discouraging investment, which in turn further lowers revenues so drastically they offset gains from the tax-rate increase.)
While fiscal conservatives keen to the superficially plausible argument that certain (e.g. Reagan and/or Bush Jr.) tax cuts grew the economy, the fallacy of this lies in graphs of actual economic growth and performance, where it's readily seen that advocates have conveniently pointed to places where tax cuts were enacted around the time of a normal recovery in the long-term business cycle. Another problem with such facile entreats is that revenue increases following tax cuts were dwarfed by the revenue increase following Bill Clinton's tax increase on the wealthiest Americans. In other words, revenue increases in those previous cases were only occurring because the economy was already recovering/growing. If anything, tax cuts actually lower revenue increases from what they would otherwise be.
Because it has been abundantly demonstrated empircally that tax-rate fluctuations are inconsequential to corporate or individual investor behavior, it's difficult to reconcile why Luddite conservatives continue to trot this out to bolster the case for cuts. This is what über-capitalist Warren Buffet had to say on the folly of tax-coddling the super-rich:
"Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends. I didn't refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone—not even when capital gains rates were 39.9 percent in 1976-77—shy away from a sensible investment because of the tax rate on the potential gain... And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what's happened since then: lower tax rates and far lower job creation."
In other words, even Buffet thinks trickle-down economics are a dangerous fallacy. The wealthy invest as long as they can expect a return on investment, so their main concern is in the health parameters of an economy—demand, interest rates, market, etc.—and not taxes. Higher tax rates can even encourage more investment because of the potential to offset taxed earnings through investment credits.
Tax-cut scales have fallen from other eyes. Bruce Bartlett, who held senior policy roles in the administrations of Ronald Reagan and George H.W. Bush, actually fingers the Bush Jr. tax cuts as the root of current fiscal problems in the U.S.: "It would have been one thing if the Bush tax cuts had at least bought the country a higher rate of economic growth, even temporarily. They did not."
The tax debate, unfortunately, is no longer conducted between two sensible points of view. Rather, one sensible view explains why taxes must be raised at times in order to help close the gap between revenues and spending, while the other view, anything but mathematically sensible, argues (no matter objective facts or empirical analysis) that raising taxes only stifles economic growth, and cutting taxes is the only way to raise revenues.
With most pundits now armed with the facts, conservatives have nowhere to hide from their weak tax-cut pronouncements. After body-slamming Mitch McConnell for such indiscretion in a New York Times opinion column, Paul Krugman offered this delicious satirical truth: "... for those readers who complain that I'm too partisan, that I should admit that there are two sides to the issues, this is a prime example of my problem. How am I supposed to pretend that [conservatives] are serious people? The facts really do have a well-known liberal bias."
Next time: in the court of King Stephen.