I'm not exactly impressed with John McCain's economic knowledge, but I didn't think the situation was quite this bad:
But if McCain's capital gains talk is misleading, his comment that "you can't get over the fact that historically when you raise people's taxes, revenue goes down" is economic Scientology. Not only is it wrong, but it's not even the sort of wrong with a long and distinguished tradition behind it. Even conservatives who believe in supply-side economics wouldn't suggest that raising taxes reduces revenues save at extremely high rates of taxation. Rather, when you raise taxes, revenues go up. It's a pretty simple concept, and John McCain has been in government long enough to see it demonstrated a number of times. If he needs a graph and some more explanation, he can ask an economist. But the sort of supply sider-ism he's currently spouting is no different than believing in Thetans. In fact, it's arguably worse, as Thetans can't really be disproven, while there's plenty of evidence showing that higher taxes lead to increased revenues.(For more on all this, see Hilzoy and Kevin.)
"You can't get over the fact that historically when you raise people's taxes, revenue goes down," [McCain] said. "Every time we cut capital gains taxes, there has been an increase in revenues."The second half of that statement is wrong, but it's the sort of wrong that mainly suggests John McCain doesn't know much about economics. Capital gains cuts increase the next year's revenue, but then they decreae revenue the year after that. As Justin Fox has explained, "capital gains tax cuts invariably result in a revenue increase the next year, because investors aren't idiots: If they see a cut coming, they're likely to delay capital-gains-generating transactions until after the tax rate drops. But I don't know of any serious economist who thinks that cutting the capital gains tax rate increases revenue over time." He's even got a graph:
But if McCain's capital gains talk is misleading, his comment that "you can't get over the fact that historically when you raise people's taxes, revenue goes down" is economic Scientology. Not only is it wrong, but it's not even the sort of wrong with a long and distinguished tradition behind it. Even conservatives who believe in supply-side economics wouldn't suggest that raising taxes reduces revenues save at extremely high rates of taxation. Rather, when you raise taxes, revenues go up. It's a pretty simple concept, and John McCain has been in government long enough to see it demonstrated a number of times. If he needs a graph and some more explanation, he can ask an economist. But the sort of supply sider-ism he's currently spouting is no different than believing in Thetans. In fact, it's arguably worse, as Thetans can't really be disproven, while there's plenty of evidence showing that higher taxes lead to increased revenues.(For more on all this, see Hilzoy and Kevin.) 
