Tax cuts pay for themselves
| Tax cuts pay for themselves | |
|---|---|
| FALSE | |
| "Cutting tax rates boosts growth so much that the government collects as much or more revenue than before." | |
| Domain | Economy & Labor |
| Tactic | Statistical & Evidentiary Distortion Propaganda Technique |
| Era | Current |
| First seen | 1970s |
| Origin | Supply-side economics, popularized by the "Laffer curve" in the 1970s; repeated by officials of many administrations, including about the 2017 Tax Cuts and Jobs Act |
| Last reviewed | 2026-10-29 |
| Further reading: books on Economy & Labor | |
The claim that tax cuts pay for themselves is frequently made by supporters of tax cuts. Economists across the spectrum agree that tax cuts can boost growth somewhat, but official estimates of major US tax cuts have found that growth offsets only part of the lost revenue.
The claim
In 2017, Treasury Secretary Steven Mnuchin said the Tax Cuts and Jobs Act would pay for itself and reduce deficits.
What the evidence shows
- 2017 tax law. The Joint Committee on Taxation estimated the law would add about $1 trillion to deficits over ten years even after accounting for faster growth. The Congressional Budget Office later estimated a larger figure.
- Kansas. Kansas cut income taxes sharply in 2012 and 2013; revenue fell short and the legislature reversed many of the cuts in 2017.
- Laffer curve. At very high rates, cuts can raise revenue. Most economists think US rates are well below that point.
Why it persists
It offers a policy with no apparent cost.
Sources
- Joint Committee on Taxation, Macroeconomic Analysis of the Conference Agreement for H.R. 1, the "Tax Cuts and Jobs Act", JCX-69-17, December 2017.
- Congressional Budget Office, The Budget and Economic Outlook: 2018 to 2028, April 2018.