How Tax Cuts Affect Revenue
What the past tells us as the GOP enacts a historic tax overhaul
After taxes were cut in 1981 and 2001, the Congressional Budget Office crunched the numbers some years later to see what had happened.
.. In 1985, they went back and looked at how much revenue the government actually collected. They sought to separate the effect of economic changes, such as the 1982 recession, from the effect of tax changes implemented under President Ronald Reagan. They figured that economic and technical changes caused revenue in 1985 to be about $187 billion lower than it was in the baseline projection, made in 1981 — a shortfall of about 18%.