Here comes the taxes

[LloydDobbler 2]

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BTW, why did Newt's party win in 1994? In large part, the taxes that Clinton promoted. Did that have a factor in the essentially balanced budget later? Of course, and a pretty good counter proof to the often parroted claim of: lower taxes always means more revenue, and higher taxes kills the economy.

Ah, except for the real reason for the economic boom - the internet. It was made open to commercial interests in 1988, and the WWW was invented in '89, but didn't really come into public interest until late 1993 with the first release of the Mosaic browser. Soon thereafter a guy Jeff Bezos quit his job and moved to Seattle, having realized the incomparable benefit of being able to sell your products to millions upon millions of people, 24 hours a day, with reduced overhead and ridiculously-low marketing costs.

The rest, as they say, is history.

The internet was an economic game changer, the likes of which has never been seen in the history of the world. Even the invention of the Gutenberg press, cotton gin, and automobile didn't do as much to create economic growth as did this beast - all due to scalability.

So I don't think you can say with any degree of certainty whether that period in the Clinton administration proves that higher taxes equal increased tax revenue, as you don't have a control to compare it against. No matter what anyone (Al Gore included) tells you, we can't say that it was planned to happen that way, at that time. It just did. Had you moved the internet boom to another period with lower taxes, it may have led to even MORE revenue and economic growth than it did.

To be fair, there's largely no good way to compare time periods like this. Due to the ever-changing world, they'll always be apples-to-oranges comparisons to some extent. But given the radical changes the internet made to the economic landscape (on a scale never-before seen), looking at that particular time period as evidence that supply-side economics don't work is unrealistic (at best).

Signatures are the new black.

[kelpdiver 2]

The internet changed the game, but not that quickly. The dot bomb essentially proved that. VC was dumped into anything with a .com in the concept, and eyeballs were considered far more important than profit. Most of these companies never made money, therefore never paid taxes. There were capital gains taxes, and a slight bump in income taxes due to salary inflation, but this isn't remotely big enough to balance the very large deficit that was in play in 1992.

The big gains from the internet started around the turn of the decade and onward.

As for voodoo economics, we've seen over and over that tax cuts lead to increased deficits, and the revenue growth disappears when you control for inflation and population growth.