An Interesting Take on Tax Cuts, Revenue and Jobs...

I was looking on the Hartford Courant's website for information about how to send a letter to the editor (I've drafted a letter regarding yeterday's editorial on the "Lost Liberty Hotel" project, which I'll share with you all later), and I came across the following letter.

I really enjoy it when a person reads or sees an item in the media, it doesn't jibe with them, and they do the research that proves what they suspected. In this case, Tim Manning of Middletown, CT, thought there wasn't something right with another letter writer's assertion that the jobs that have been created in this economy cost roughly $191k apiece, due to the tax cuts.

So, he went, pulled the figures, did the math, and found the flaw in the earlier letter (showing again, incidentally, just how right Arthur Laffer was):

http://www.courant.com/news/opinion/letters/hc-lets0209.artfeb09,0,4294624.story?page=2&coll=hc-headlines-letters

Revenues Increase Despite Tax Cuts

In his Feb. 7 letter ["Expensive Jobs"], Robert A. Weeks draws the conclusion that each of the 4.6 million jobs created since 2002 cost $191,204 dollars to create, based on federal tax cuts of $880 billion dollars. I visited the Congressional Budget Office website (www.cbo.gov) and looked up the historical budget numbers.

In 2002, the total of all individual income taxes collected by the federal government was $858 billion. In 2005, revenue from individual income taxes had risen to $927 billion. So, even though there was a cut in tax rates, there was no cut in tax revenue.

However, individual income taxes represent only a portion of all income collected by the federal government. In 2002, the total revenue collected by the federal government was $1,853 billion. In 2005, the total revenue collected by the federal government was more than $2,154 billion.

I realized that Mr.Weeks was looking at the problem backward. The question is not, How much did it cost to create 4.6 million new jobs? A better question is, How much additional revenue did the government collect while the economy was creating 4.6 million new jobs? The answer appears to be $301 billion.

Tim Manning
Middletown

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Excellent job, Mr. Manning. Well-researched and cogently written. Keep up the great work!

- Andrew Langer