Brian Riedl’s First Myth
Reader Steve Miller pointed me to an Andrew Sullivan post. Sullivan states: “Some things the left won’t tell you” and then produces some quotes taken from this, um, write-up by Brian M. Riedl at the Heritage Foundation entitled “Ten Myths About the Bush Tax Cuts.” I don’t have time to look at all of these now, but I’ll start with “Myth 1” and cover other “myths” in later dates.
this document and tells us to reference OMB Table 1.3 to make a point. Note to Riedl – its easier to work with the data when its not in PDF format – look here instead.
So, without further ado…
“Myth #1: Tax revenues remain low.
Fact: Tax revenues are above the historical average, even after the tax cuts.”
Riedl goes on… “Tax revenues in 2006 were 18.4 percent of gross domestic product (GDP), which is actually above the 20-year, 40-year, and 60-year historical averages.”
Now, he links to this document
this document and tells us to reference OMB Table 1.3 to make a point. Note to Riedl – its easier to work with the data when its not in PDF format – look here instead. Anyway, wherever you check, this morning OMB Table 1.3 shows estimated tax revenues for 2006 to be 17.5 percent. Now, I wouldn’t trust the estimated figures, especially when coming out of this White House, but Riedl is not getting his figure from where he tells us he’s getting his figure. 18.4% is not 17.5%. Perhaps 18.4% is an 11th myth he forgot to number?
Continuing… when I take the average 20 year receipts (1986 to 2005), they are in fact 18.4%, which is higher than the receipts in 2002, 2003, 2004, 2005, and the estimated receipts in 2006 (17.9%, 16.5%, 16.3%, 17.5%, and 17.5% respectively). 40 year receipts – 18.3%, were also higher than for each year since 2002. 60 year receipts were at 17.9% – now we’re getting somewhere. GW actually managed to equal the 60 year average… in 2002 before the worst effects of his tax cuts really took hold.
Even if it turns out that receipts do rise in 2006 to 18.4% – I wouldn’t be crowing about a single outlier year if I were Riedl, or Sullivan for that matter, but then, I’m neither one, for which I am very thankful. When I have time, I’ll look at the other “myths” Riedl wrote about. I’d suggest Riedl do the same, but then again, he works for the Heritage Foundation, and no doubt he wants to keep that gig. Its easier than looking at what the data actually says.
Update… Reader Rana suggests that the data comes from the CBO. CBO Table 1-3 does indeed show tax receipts at 18.4% of GDP, so Riedl’s figure for 2006 is correct, even if the source he gives is wrong.
Comparing the CBO figures to data from previous years at
OMB Table 2.3, we find that individual tax receipts are up … almost to the point they were in 2002. Corporate tax collections are at 2.3 percent – they haven’t been above 2 percent since the year 2000. As I noted in other posts, this probably has more to do, paradoxically, with the IRS willingness to forgive past tax evasion in exchange for some amount of current payment. “Other” is also at quite a high – apparently some sort of hidden taxes – things like fees and so forth.
So… a second look at this myth… Riedl is partly right… tax receipts are once again, after several awful years, back at their 20 and 40 year averages. If they remain this way, at least for two or three years, when it comes to tax collection, the last few years of GW’s term will be, well, average. That is… if they remain this way. Considering GW’s performance in other areas, I can see why Riedl is excited.