He asserts that no matter what you do with taxes, tax revenue comes in at 19% of GDP because tax increases hurt economic growth and tax cuts increase it. Oh really?
If you average the Bush years versus the Clinton years, the federal government average taxes as a percentage of GDP nearly 2 full percentage points below the Clinton years. This was despite a huge run up in corporate tax receipts as corporate profits hit an all-time high that had just about nothing to do with tax policy since corporate tax rates were left at 35%. Comparing peaks in the business cycle we also have about a 2 percentage point gap.
Not all of this is the static effect of taxes being at lower levels. It is also a function of the fact that the economy did not grow nearly as quickly in the 2000s as in the 1990s. However, that in of itself would seem to indicate that tax cuts don't generate additional revenue as there was nothing particularly remarkable about economic growth following two significant tax cuts in 2001 and 2003.
Ah, but Mr. Hauser says that we can see that economic growth was revived by the tax cuts. He says the six quarters following the tax cuts averaged a GDP growth rate of 3.8% compared to an average of 1.8% prior to the 2003 tax cuts. First of all, he is ignoring that the larger of the two tax cuts was passed in May of 2001. Secondly, he is ignoring the fact that the Federal Reserve was substantially aiding the recovery from the recession with massive monetary stimulus. Thirdly, the recovery in the economy was led by residential fixed investment, which had little to nothing to do with tax policy changes. Fourthly, at comparable portions of the business cycle, tax revenues as a percentage of GDP were lower in a systematic way. So, not only did GDP not grow as fast, we collected less of it in taxes.
Looking at the same comparison he attempted to make for just the 2003 tax cuts, we have 1.3% average growth in the six quarters following the 2001 tax cuts compared to the six quarters preceding them at 2.2%. Also, for the recent stimulus (which I am sure Mr. Hauser does not approve of), we have averaged 2.3% since its passage compared to -2.1% in the six quarters before it. Is this disingenuous? Oh heck yeah, but what he did also was. This sort of analysis does not constitute any form of economic analysis. It is selectively applied correlation analysis, but there is no systematic approach applied to compare the period he selected with other similar periods and other tax policy decisions, or to control for what other economic trends were at work (Federal Reserve interest rate decisions, reductions in oil prices, housing market trends, etc.), or... well... any kind of analysis at all.
Incidentally, under a similar form of analysis I could point out that the six quarters following the Reagan tax cuts averaged -0.9% GDP growth, but that isn't fair since the Fed killed economic growth to subdue inflation. Similarly, you cannot credit the growth that started in Q4 1982 to the tax cuts entirely because the Fed was the primary agent stimulating economic growth at that point.
If you make decisions on whether or not to invest on political pundits such as Mr. Hauser, who also apparently has an incredibly inflated ego, I urge you to reconsider. I would remind everyone that many Glenn Beck followers completely missed the largest stock market rally in recent history from the March 2009 lows because they were convinced that some Communist takeover had just occurred.