Tim Pawlenty Believes In The Tax Fairy: Tax Cuts ‘Always Produce An Increase In Revenue’

One of the most persistent myths amongst conservatives is that tax cuts magically produce an increase in revenues. Despite all evidence to the contrary, they continue to make this thoroughly debunked claim, keeping the story of the “tax fairy” alive and well.

Last year, during the debate over whether or not to extend the Bush tax cuts for the richest two percent of Americans, Senate Minority Leader Mitch McConnell (R-KY) claimed that “there’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy.” Today, 2012 GOP hopeful Tim Pawlenty — after releasing a tax plan this week that would cost $7.8 trillion, three times as much as the Bush tax cuts — appeared on Fox News and made a even more audacious claim:

Keep in mind, whether it be the Bush tax cuts, the Reagan tax cuts, or other tax cuts, they always produce an increase in revenue. There’s no dispute about that…We don’t have to guess what will happen to revenues if we do bold tax cuts, and mine are amongst the boldest in the modern history of the country. We saw that the revenues increased dramatically because of President Reagan’s tax cuts, same with Kennedy, same to significant extent under President Bush the second. So it’s not a question of whether revenues are going to go up. They will.

Watch it:


This is simply nonsense. As this graph shows, the 1981 Reagan tax cuts and the 2001/2003 Bush tax cuts were both followed by drops in revenue:

As Nobel Prize-winning economist Paul Krugman wrote, “the revenue track under Reagan looks a lot like the track under Bush: a drop in revenues, then a resumption of growth, but no return to the previous trend. This is exactly what you would expect to see if supply-side economics were just plain wrong: revenues are permanently reduced relative to what they would otherwise have been.”