NCPA - National Center for Policy Analysis

Tax-Cut Tactics

September 8, 1999

While Republican lawmakers have been pushing the GOP's $792 billion tax cut at over 600 town meetings across the country, President Clinton remains adamant against it -- calling the plan "risky." But tax-policy analysts point out that even with the tax cut, tax revenue would hit historic highs.

  • According to data from the National Center for Policy Analysis, with the tax cut, federal revenues as a percentage of gross domestic product would stand at 20.7 percent in the period 1999-2009
  • Without the cut, the proportion would be 21.3 percent -- a level of spending NCPA economist Bruce Bartlett calls "unjustified."
  • For purposes of comparison, federal revenues amounted to 20.5 percent of GDP between 1993 and 1998.
  • Bartlett points out that if federal revenues were to average the same percentage of GDP as existed before President Clinton took office, "Congress would have to cut taxes by $3.4 trillion between 1999 and 2009."

That amount is more than four times the size of the GOP's tax cut, suggesting to many experts that the GOP figure is too low, rather than too high as Clinton claims.

Bartlett also points out that even though the Clinton administration labels the tax cut as too large, it averages just 0.6 percent of GDP over the 10-year period. That would make it one of the smallest major tax cuts ever enacted.

Source: Peter Cleary, "Spinning Against the Tax Cut," Investor's Business Daily, September 8, 1999.

 

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