The Bush tax cuts brought our national tax rates to its lowest level since the 1920s. The principal argument behind the cuts was that it would increase liquidity in the private sector and consequently, generate a higher level of economic activity. In addition, it would also allegedly provide the incentive for American money parked overseas to return home.
However, none of those things happened.
You know why? Because the theory has no economic merit, and is based neither on statistical nor empirical data. Instead, it originated during a dinner party in 1974 at the Two Continents Restaurant at the Washington Hotel in Washington, D.C. In attendance was Dick Cheney, Donald Rumsfeld and Prof. Arthur Laffer. What started as a campaign talking point eventually morphed into the Laffer Curve, now a central tenet in the GOP economic dogma.
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