Sure. It is simply not anything close to the being the primary driver of receipts, and it's indirect effects tend to be inverse to it's direct effects.
Of course rates are the primary drivers of receipts. Over any reasonable time horizon (e.g. 10 years) taxable income is largely independent of tax rates - it's not 'fixed' but perhaps 80-90% fixed, assuming definitions of the base don't change. So, yeah, you change the top marginal rate by 5% and receipts change by something like 80-90% of that rate change.
You're assuming that tax rates are the primary driver of economic activity or taxable income and there is just ZERO evidence for that assumption.
An example, perhaps: You decide that you want to be stronger, so you go to the gym, and work out. Well, in the short term, this is a disastrous strategy. When you leave the gym, you will, in fact, be tired, and your muscles will be torn - you will be weaker when you leave the gym than you were when you walked in.
There are two different questions you're addressing. 1) Do lower tax burdens maximize economic activity? and 2) Can we grow government by cutting tax rates (and keeping the definition of the base constant)? The answer to 1) is yes, as long as we cut spending so the shortfall from the drop in receipts from tax rate cuts isn't borrowed and 2) NO!
You're either conflating those two different issues, or pretending that the boost in economic activity DOES more than offset the first order effect of a lowering of tax rates. This is an empirical question and the data say - NO! - tax rate cuts will reduce revenues. There is no free lunch, no tax Santa Clause.
Possibly. It depends where you are starting from. Moving from a top nominal rate of 39.5% to a top nominal rate of 35% will have diminished returns. Moving from a top nominal rate of 90% to a top nominal rate of 50% could have fantastic returns.
Fine - in this reality in 2017, we're not at 90% so that scenario is nice to discuss theoretically, but moot as it relates to current policy discussions.
That's on regular income, mind you. Labor is less elastic than things like investment, as you note indirectly when you point out the higher return on cutting those rates.
Yes, and again in 2017, we subject capital gains to a lower tax rate already.... BTW, by some estimates about HALF that complexity in the IRC and Regs is because of our preferential taxation of capital gains, so if you want to eliminate complexity, subjecting all income to a uniform rate is the single biggest step we can take, by far, by orders of magnitude over all other options.
And the 'higher return' from capital gains tax rate cuts STILL means tax rate cuts LOWER REVENUES.
Kind of funny that (almost) all the "flat tax" proposals out there exempt capital gains and dividends from tax entirely, and often exempt interest income. Gosh, what happens if individuals can recharacterize ordinary income at 25% even, to a 0.00% taxable category? Tax simplification? LMMFAO......
Over the course of a year? :shrug: again, I would say it would depend on where you are starting from, and where you are moving, and how you are doing it. Temporary tax cuts, for example, do not have much effect because they do not alter long-term incentives, and so they are less likely to significantly alter behavior.
No, it's not over a year but over any reasonable period that is relevant to decision making - a decade or so.