Just so stories

Scott Sumner highlights the coincidences that must occur in order for someone to believe that the marginal tax rates don't impact the supply side of the economy.

Yes, the huge increase in the top MTR under Hoover and Roosevelt didn’t raise much revenue, but that was because it “just so happened” that America’s income distribution got much more equal after 1930.  No supply-side effects there.  And yes, the Reagan tax cuts on the rich were actually associated with more revenue, but that’s because it “just so happened” that the income distribution got much less equal after 1980.  And yes the Europeans don’t actually raise much more revenue than we do, despite higher tax rates, but that’s because it “just so happens” that Europeans work less.  You say they work less for tax reasons?  Don’t be silly—it “just so happens” the Germans and French have lazy, happy-go-lucky cultures.  You say the French worked as hard as Americans in the 1960s?  It “just so happens” this distinctive French culture developed only in the past few decades, when their tax rates rose far above American levels.

As he highlights, just because one side ignores the supply side effects of the MTR doesn't mean that the politicians who make outlandish claims about the benefits of tax cuts should be taken any more seriously. Tax cuts might pay for themselves if they occur with spending cuts, but this is not a short term calculation.