When taxes go up, does revenue go down? Rep. Mike Pence, R-Ind., argued as much during his fascinating face-off with Reagan budget director David Stockman on ABC’s “This Week With Christiane Amanpour,” as Stockman argued that the deficit is so out of control that the nation will need to slash entitlements, defense spending and foreign aid and raise revenue, too. Pence said: “Anybody who is familiar with the historical data from the IRS knows that raising income tax rates will likely actually reduce federal revenues.” The experts consulted by the nonpartisan PolitiFact.com website “said the economic theory Pence is drawing from doesn’t apply in the current situation, and an increase in tax rates would not cause tax revenues to decline.” Pence’s theory also failed Kansas’ real-world test: Since state sales tax increased by 1 percent at the beginning of the new fiscal year in July, revenues have exceeded projections by 2.9 percent.
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