On December 20, Congress passed a historic tax reform and tax cut measure that was signed into law by the president on December 22.  Critics of this measure have been insisting that the reduction in taxes will exacerbate the deficit and long-term debt.  Nothing of the sort will happen, even though several members of Congress and even the CBO think it might.  We can show via historical graphs produced by the Saint Louis Federal Reserve Bank that changes in tax policy and rates since 1929 have had little effect on the amount of money collected by the federal government as a percentage of GDP.  (See here.) Put another way using historical data, it appears that the only thing that has a great effect on federal government receipts is GDP, not the type and rate of tax levied.  Thus, persons seeking to raise government revenues would be wise to do things that would promote GDP growth.  Since the probable effect of the tax reform and tax cut passed by...(Read Full Article)