Matt Yglesias explains how economic growth raises taxes. Not just in dollar terms (bigger economy, bigger pie, more tax revenue) but in share of GDP terms. You can see that casually from yonder chart:
here are a few reasons for this. But maybe the most important one is that we have progressive taxation in this country. Richer people pay not just higher taxes, but a higher share of their income in taxes. So if the economy grows and people get richer, the share of their income they pay in taxes goes up and—ta da—the tax share of GDP goes up. Since it’s much easier to pay for new programs by restraining the quantity of tax cuts than to pay for them by raising taxes, this means that rapid GDP growth is a friend of progressive governance. This, in turn, is one reason why tax reform that closes loopholes in exchange for cutting rates could be such a useful idea. It’s a huge shame that we went through this whole standoff and haven’t come away with any path forward on this.