• When Reagan cut the capital gains tax from 28% to 20% in 1981, capital gains tax revenues rose from $12.5 billion under the old 28% rate to $18.7 billion under the 20% rate. The rate dropped by a third and revenues rose by a third.

• Then, when Reagan bowed to liberal pressure and put the rate back up to 28%, revenues from the capital gains tax fell from $328 billion to $112 billion. The tax had risen by eight points but revenues had dropped by two-thirds.

• And, in 1996, when Clinton cut the rate back down to 20%, tax collections from the capital gains levy rose from $66 billion to an average of $100 billion over the next four years. More important, the capital gains tax cut stimulated investment and capital gains. Under the higher tax rate, in 1996, there were $261 billion in capital gains in the U.S. In the three years after the cut, the total of capital gains rose to an annual average of $440 billion.

So the Buffett Rule makes no economic sense and won’t do anything to cut the budget deficit. In fact, it will probably cost us revenue.

Petrosianic - I wonder what happened to the amount of income tax paid in the time period you're talking about. There's been a big issue in the UK with self-employed people like IT consultants setting up a company through which they get paid, thereby exposing their earnings to corporation tax rather than income tax. If the two tax rates are similar this isn't worth doing, but as corporation tax becomes lower than income tax then it becomes more and more worthwhile.

Morris's argument is a classic fallacy of causal oversimplificaton.