The Laffler article argues that total federal receipts rose in the years following the Coolidge, Kennedy, and Reagan tax cuts. That is not actually true for the Coolidge cuts (1918-1925 top marginal rate went from 77% to 25%, total federal receipts did not increase in the following four years), it is true for the Kennedy and Reagan cuts (1963-1965 top marginal rate went from 91% to 70% and 1980-1982 top rate went from 70% to 50%, respectively, total federal receipts increased in the following four years).
However,
the Laffler article is misleading, because it leaves out this fact. Total federal receipts also rose in the years that did not follow any tax cut. If you compare tax cut periods to non-tax cut periods, there is no evidence that receipts grew more in years following tax cuts.
Here is a chart showing the top marginal federal income tax rate (blue line), total federal tax receipts (red line). The receipts line is log plotted, so the slope of the line indicates the percentage growth.
In the few years following the Kennedy and Reagan cuts, the slope of the line is no different than in other years of the period.
Strictly speaking, the data actually suggests that receipts grow more in years following tax increases than in years following tax cuts.
Here is a scattergram plot of receipt growth and tax rate change. Each point is a year, and represents the percent growth of average receipts in the four following years over the average receipts in the four preceding years, versus the change in average top marginal rate in the four following years over the average rate in the four preceding years. I used four year periods because that's what the Laffler article did.
The trendline slopes positive, meaning that increasing rates tend to coincide with higher growth in receipts.
If you still believe Laffler curve "theory", given nearly 100 years of actual data that don't support it, consider this. Laffler did not say that lower tax rates always cause higher tax receipts. He theorized that there is a point above which tax rates become "prohibitive". His theory was that when rates are at or above that prohibitive point, increases in rates cause declines in receipts while decreases in rates cause increases in receipts. When rates are below the prohibitive point, his theory was that the reverse happens: increases in rates cause
increases in receipts while decreases in rates cause decreases in receipts. That's implicit in the shape of the curve, shown below.
The Laffer Curve: Past, Present, and Future | The Heritage Foundation
Laffler Curve article that P-O-P refers to
http://www.gpoaccess.gov/usbudget/fy10/pdf/hist.pdf
Federal receipts, see table 1.1 p. 21
Consumer Price Index, 1913- | The Federal Reserve Bank of Minneapolis
CPI and inflation, 1913-2010E, base year is 100= avg of 1982-1984.
INFLATION AND THE CONSUMER PRICE INDEX
calculating constant dollars from CPI