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Tax rates and economic growth
Posted by: Jon Henke on Sunday, January 13, 2008

At his blog, Paul Krugman presents some employment-population, labor force participation and wage charts and writes
The point of these charts is not to say that Clinton deserves credit for all good things and Bush deserves blame for everything bad. The point is, instead, to show how crazy it is when Republicans claim that a return to Clinton-era levels of taxes will destroy the economy. The fact is that the economy did a lot better in an era when we had a 39.6% tax rate on dividends and a 28% rate on capital gains than it has in an era with both rates down to 15%.
To some extent, I agree that some relatively minor changes in tax rates aren't going to have an enormous negative effect on the US economy at current tax levels. They didn't exactly crater our economy in the 80s and 90s when Reagan, Bush and Clinton raised taxes.

But it's one thing to say that they won't have a significant effect, and it's another to say that the economy did better when tax rates were higher and to suggest that it might be true again. Can somebody explain the transmission mechanism here? What is the causal relationship between higher tax rates and improved economic growth?

Perhaps there's one there - higher taxes on capital may lead businesses to plow that money back into labor, instead - but Krugman seems to think investment levels have been too low, and I'm not sure the trade-off would account for that much. Indeed, it seems that the 1990's figures he cites were probably driven by too much irrational investment, rather than a higher-tax-rate-driven labor spending.

Meanwhile, Tom Maguire points out that Krugman's column defending European economic performance contains some amusing rationalizations. Writes Maguire:
My goodness - Europe has outperformed America in job creation when measured from the peak of America's internet bubble in 2000. Oddly, the Bush White House was able to cherry-pick a different time frame and boost America.

Per this graph, unemployment in the European Union fell from about 9% in 2000 to about 7% today; in the US, unemployment has risen from a boom-time 4% all the way back to 5%. Go, Europe!
[...]
He then attempts to explain its glorious success:
What’s behind Europe’s comeback? It’s a complicated story, probably involving a combination of deregulation (which has expanded job opportunities) and smart regulation.
Deregulation? Gee, conservatives have been saying for decades that Europe needs to cut taxes and deregulate its labor market if it wants to create jobs (this IMF study from 2000 said the same thing.) Now we are seeing some impact, so conservatives ought to pipe down?
The Right does tends to overstate the costs and benefits of most changes in US tax rates, but the data Krugman uses to justify his argument seems rather selective.

UPDATE: Tom Blumer points out that "Krugman is partially right. Parts of Europe are doing better. The only trouble is that the parts doing better are the ones not embracing the high-tax, high-spending model Krugman so adores."
 
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I don’t think it’s correct to say that the economy did well when Bush raised taxes. (I’m assuming Krugman means Bush 41; if that’s not the case, then nevermind.) Bush raised taxes in Fall of 1990, and the country slipped into a recession for 1990Q4 and 1991Q1. Perhaps the country would have slipped into a recession anyway; we’ll never know.

Reagan and Clinton both raised taxes in an economy that was already starting to expand, so to claim a causal relationship between raising taxes and an expanding economy based on Reagan and Clinton is a tremendous leap in logic.
 
Written By: Steverino
URL: http://
I don’t see any reasonable way that the recession that began in July of 1990 could be attributed to the tax hike that Bush 41 agreed to in November of 1990.

I haven’t suggested that tax hikes led to an expanding economy - I noted that the economy expanded quite well regardless of the tax hikes. I simply questioned the seemingly implied idea that raising tax rates would lead to the economy doing better than under lower tax rates.
 
Written By: Jon Henke
URL: http://QandO.net
Remember one thing - with tax increases, government bureaucrats are spending other people’s money driven by political motivations. With tax cuts, more money is put in the hands of consumers and business owners who are making spending and investment decisions with their own money at stake. Can there be any honest doubt which of the two would be more stimulative to the economy? That is the crux of the argument.

Regarding Europe, please keep in mind that the US in effect pays for their national defense. If, for example, Russia wanted to take control of Germany, the largest economy in Europe, it could easily do so militarily if Germany was standing on its own, but the US troops stationed there are the safeguard. Imagine the economic hit if the Europeans had to spend their "fair share" for their own defense if big daddy USA wasn’t around to watch their back.
 
Written By: Darrell
URL: http://
Remember one thing - with tax increases, government bureaucrats are spending other people’s money driven by political motivations. With tax cuts, more money is put in the hands of consumers and business owners who are making spending and investment decisions with their own money at stake. Can there be any honest doubt which of the two would be more stimulative to the economy? That is the crux of the argument.
No, that’s not the crux of the argument. It’s an important, albeit elementary, point, but the problem is figuring out how much of an impact it really has. Tax cuts certainly don’t "pay for themselves", and tax hikes certainly don’t prevent economic growth. So how much of an impact do they have, and what distortions do various rates introduce? Those are the important questions.
 
Written By: Jon Henke
URL: http://QandO.net
Is that a question, or a statement?

Sounds to me like you’re trying to suggest, along with Krugman that tax cuts don’t damage the economic growth which might be achieved without them.

I would argue that increased taxes slow economic growth in all cases. Every single time.

And before you start; That there have been tax hikes under which economic growth occurred in response to other stimuli is unquestionable. But the question you must answer is what kind of economic growth beyond what growth we saw in those cases, did our tax policy cost us?

You won’t like it, I’m sure, but Reagan vs Clinton is your only useful guidepost there.


 
Written By: Bithead
URL: http://bitsblog.florack.us
Or, perhaps more "Ant to Elephant", Reagan vs Carter.
 
Written By: Bithead
URL: http://bitsblog.florack.us
I don’t see any reasonable way that the recession that began in July of 1990 could be attributed to the tax hike that Bush 41 agreed to in November of 1990.
There were at least a couple of areas that did badly directly because of the tax hike. The 1990 tax raised taxes on "luxury" transportation, including yachts. People stopped buying new yachts, which put American shipbuilders into a tail dive. But yes, the recession began before the tax hike; I had erred on the dates.


 
Written By: Steverino
URL: http://
No, that’s not the crux of the argument. It’s an important, albeit elementary, point, but the problem is figuring out how much of an impact it really has
You say my argument was "elementary", as if your point could ever be quantified to any reasonable degree. Many/most on the left truly believe that government spending is as stimulative, or more stimultative than if that money had stayed in the pockets of the private sector. Krugman himself in the article you cite is pushing that very idea.

The fact is, tax hikes, although harmful to economic growth, if enacted in a booming economy may allow the economy to continue to boom, albeit less so as a result. In other cases, tax hikes may stop economic growth in its tracks. The impact of tax increases is not some linear thing that lends itself to precise measurement.

Clinton inherited a recovering economy on the upswing before he was sworn into office. He raised taxes marginally and the economy marched on fueled by a technology boom, more free trade (trade restrictions are another form of tax imo), and a bit of smoke & mirrors fraud ala Enron/Worldcom, along with excesses of a bubble. I believe the ecomony would have done better had Clinton instead cut taxes, but that’s an impossible thing to measure.

Tax cuts are kind of like eating green vegetables. Eating fried pork rinds are like tax hikes. It’s undeniably good for you to eat green vegetables, but nearly impossible to quantify ’how good’. Serious disease befalls those with healthy diets every day. It’s undeniably bad for you to eat fried pork rinds, but that doesn’t mean that you can’t maintain good health while eating a steady diet of fried pork rinds.



 
Written By: Darrell
URL: http://
Sounds to me like you’re trying to suggest, along with Krugman that tax cuts don’t damage the economic growth which might be achieved without them.
Then you need to brush up on your reading skills. I didn’t remotely suggest that.
The impact of tax increases is not some linear thing that lends itself to precise measurement.
I believe I made exactly that point in this post. The question is not whether tax cuts have some degree of stimulative effect (they do), or whether tax hikes have some degree of retarding effect (they do), but how significant that effect is. Evidence suggests that, at current US tax rates, it’s not necessarily that significant of an effect.

So, the question becomes whether the budget deficits/national debt those tax cuts/hikes either produce or eliminate are ultimately worth the additional, short term .1 or .2 percent GDP growth. Perhaps they are, perhaps they aren’t.

A more interesting question, I think, might be what distortionary effects the tax rates have on allocative decisions between capital and labor, spending and saving, etc.
 
Written By: Jon Henke
URL: http://www.QandO.net
Then you need to brush up on your reading skills. I didn’t remotely suggest that.
My error. Should read ’tax hikes".

As to how significant tax rates are to gven events, this is, rather like football, a game of inches, where an unpredictable bounce will drastically change the direction of the game.

Similarly, however, while a bad ball hop will produce varied results, damage-wise, I think it fair to say that tax hike invariably damage the economy to at least some small amount.


 
Written By: Bithead
URL: http://bitsblog.florack.us
My error. Should read ’tax hikes".
I knew what you meant. The answer stands.
 
Written By: Jon Henke
URL: http://www.QandO.net
Fine.

So, let’s be clear, here. Is your position, that my statement, "I think it fair to say that tax hike invariably damage the economy to at least some small amount" is inaccurate?

Is your position, as Darrel points up of most leftists, that governmment spening is stimulative?

Or are you simply asking the questino of cause and effect, in total?






 
Written By: Bithead
URL: http://bitsblog.florack.us
Funny how I never seem to hear the name Robert E. Rubin.
Mr. Robert E. Rubin, long active in national and New York City’s public affairs, joined the Clinton Administration in 1993 as Assistant to the President for Economic Policy and Director of the newly-created National Economic Council. Under Mr. Rubin’s guidance, the NEC oversaw the Administration’s domestic and international economic policymaking process, coordinated economic policy recommendations to the President and monitored the implementation of the President’s economic policy goals.

From 1995-1999, Mr. Rubin served as the 70th U.S. Secretary of the Treasury. As Secretary of the Treasury, Mr. Rubin played a leading role in many of the nation’s most important policy debates. He was involved in balancing the federal budget; opening trade policy to further globalization; acting to stem financial crises in Mexico, Asia and Russia; helping to resolve the impasse between the Congress and the Executive Branch over the public debt limit; safeguarding the nation’s currency against counterfeiting; and guiding sensible reforms at the Internal Revenue Service.

In 1999, Mr. Rubin joined Citi as Director and Chairman of the Executive Committee and in November 2007, he was named Chairman. He returned to his previous role in December 2007.
Guess he didn’t want his fingerprints on this $24 billion writedown.
 
Written By: Neo
URL: http://
Certainly Citibank’s problems can be identified as government policy, insisting on banks providing loans to people who can’t afford them due to the concept of ’equal opportunity’. And the degree of the problem is the exact degree of governmental intrusion between the lenders and the borrowers.

I’m not convinced that Citi Chairman Robert Ruben is as much to blame for that policy as was Sect’y Robert Ruben was... and his boss. After all what got Ruben into problems at Citi wouldn’t have happened but for the power of government starting that ball rolling.






 
Written By: Bithead
URL: http://bitsblog.florack.us
So, let’s be clear, here. Is your position, that my statement, "I think it fair to say that tax hike invariably damage the economy to at least some small amount" is inaccurate? Is your position, as Darrel points up of most leftists, that governmment spening is stimulative?
I’m simply not sure how you can read what I wrote and think these represent open questions.

Yes, tax increases have a retarding effect on the rate of increase of economic growth. However, at current tax rates, that retarding effect is generally fairly limited over long periods. Tax cuts, meanwhile, do have a stimulative effect; again, though, that effect is more limited that some Republicans seem to believe.

Government spending can be stimulative under some circumstances. It can also simply be inflationary. It depends on various factors. In general, fiscal policy is a fairly poor stick for economic stimulus, though, at least in anything like a long term.
 
Written By: Jon Henke
URL: http://QandO.net
Yes, tax increases have a retarding effect on the rate of increase of economic growth. However, at current tax rates, that retarding effect is generally fairly limited over long periods.
On what basis do you make that claim? Seriously, how could you possibly know with any degree of certainty how much of a detriment current tax rates have on our economic growth? A significantly reduced tax rate could very well shoot the economy into overdrive.

I agree that govt spending can be stimulative. My concern is that a large and growing number on the left, a majority of them in my observation, seriously believe that govt spending is as effective or more effective in economic stimulus compared to leaving that money to be spent/invested in the private sector. Don’t underestimate the left’s willfull dishonesty on pushing socialist economic policies.

Slightly off-topic, what’s with the slam on Robert Rubin? He was one of very few high level competent Clinton appointees from what I’ve seen. The current economic problems related to banking (too-loose lending standards, irresponsible purchase and packaging of real estate CDOs) occurred after Rubin left. Or is there actually a case to made that Rubin’s policies are to blame? If so, make the case against Rubin or retract dragging his name into the current economic problems.
 
Written By: Darrell
URL: http://
On what basis do you make that claim? Seriously, how could you possibly know with any degree of certainty how much of a detriment current tax rates have on our economic growth? A significantly reduced tax rate could very well shoot the economy into overdrive.
Academic research, historical practice and the Treasury Department’s dynamic scoring study of the effect of the Bush tax cuts, which concluded that the effect was relatively small.
 
Written By: Jon Henke
URL: http://QandO.net
Academic research, historical practice and the Treasury Department’s dynamic scoring study of the effect of the Bush tax cuts, which concluded that the effect was relatively small.
Citation(s)? You’re making the claims
 
Written By: Darrell
URL: http://
I’m simply not sure how you can read what I wrote and think these represent open questions.
I know, which is why I pose the questions. You insist it a closed matter, and simply assume the rest of us are going to go along without discussion.

Yes, tax increases have a retarding effect on the rate of increase of economic growth. However, at current tax rates, that retarding effect is generally fairly limited over long periods. Tax cuts, meanwhile, do have a stimulative effect; again, though, that effect is more limited that some Republicans seem to believe.

Thanks for a direct answer. As you may ahve suspected, I have my reasons for forcing it.

Darrel has some points about that, I believe.

Additionally, your claim flies in the face of established history. Or... did you skip the 80’s?
and the Treasury Department’s dynamic scoring study of the effect of the Bush tax cuts, which concluded that the effect was relatively small.
Hmmmph. Apparently, they didn’t get the news about Southern Manhattan, and so could not make a serious judgement about the effects on the economy of that event, and IT’s result. Nothing shocking about that; these are government wonks, after all. Many of them..(Most) Democrat, desperate to prove Supply side doesn’t work.(With the force only a government spokesman can manage) What should also surprise me is you taking their work for it.

I submit that under those conditions, and as a matter of logic, ANY recovery is going to be at best modest. I further suggest that without the Bush Tax cuts, the results would have been the recession that Bin Laden obviously intended us to suffer. (Do you think it an accident he chose a financial center to attack first?) I would further that by suggesting it was the Clinton tax hikes which put us into a mild recession by the end of June of his last term. So not only did we recover from that, but the effects of the attack as well.

Let me be clear, here:

Yes, tax increases have a retarding effect on the rate of increase of economic growth. However, at current tax rates, that retarding effect is generally fairly limited over long periods
The effects, Jon, are limited not because the tax increases are any less damaging, but because those deleterious effects are usually overtaken by other economic dynamics. Similarly;
Tax cuts, meanwhile, do have a stimulative effect; again, though, that effect is more limited that some Republicans seem to believe.
The limit is not imposed by the effects of the tax cuts per se’, but rather, other dynamics, such as government over spending, and over-reglation of business and investment.

The question that needs be asked, then, is how much of an economic gain have we taxed ourselves out of? Even in those years when we’ve made serious economic gains, how much better would they have been had we done more serious tax cutting?

And Darrel;


The Ruben bit has to do with Citi’s recent troubles, which I suppose you’d not heard of as yet. Troubles which I also suppose were due to Ruben’s leadership, in no small part. That said, I see on the news this morning that what apparently pushed them into the write-down was the refusal of the Chinese state owned banks to buy up parts of Citi, thus solving the crisis brought on by Ruben. Interesting how a former Clinton adviser runs to the Chinese to solve his issues. Interesting how they turn him down. Karma, I think.






 
Written By: Bithead
URL: http://bitsblog.florack.us
The Ruben bit has to do with Citi’s recent troubles, which I suppose you’d not heard of as yet. Troubles which I also suppose were due to Ruben’s leadership, in no small part
I had forgotten that Rubin had gone to Citi in an advisory/board member capacity, as all you ever seem hear about Citi in the business press is talk of Sandy Weill then Prince. I suppose it’s possible to pin some blame on Rubin there, but Rubin’s role at Citi as I understand it was hands off up until recently. He had the role of a semi-retired political liason rather than making operational and investment decisions, right?.. or is that description of his role there not accurate? But as a Citi board member, yeah, he has some responsibility, but it seems like a real stretch to pin the blame primarily on him.
 
Written By: Darrell
URL: http://
Citation(s)? You’re making the claims
We’ve written about it pretty extensively here at QandO. Among others..

Here’s a piece about the Treasury Department’s dynamic scoring study of the effect of the tax cuts. (bear in mind, the Treasury Department is an Executive agency) They concluded that there would be a one-time increase after many years. More about that here and here.

Dale has written about the issue here, and in other places, if you search our archives.

Here’s my review of some of the expert opinion on the subject. Note that (a) even the Bush administration economists unanimously acknowledge that tax cuts do not increase revenue, and (b) even the Reagan era economic team acknowledged that only about 1/3rd of the Kennedy era tax cuts were recouped by economic growth, and they didn’t believe the Reagan era tax cuts would do more than that. And please spare me the profoundly ignorant "taxes were cut, but revenues went up" response. Correlation is not causation - not to mention the fact that Reagan also raised taxes six of his 8 years.

Here’s a post on Congressional Budget Office research into the question. From the story...
The recent analysis by Mr. Page at the Congressional Budget Office dismisses the idea that tax cuts may actually improve the government’s fiscal situation. Even in his most generous scenario, only 28 percent of lost tax revenue is recouped over a 10-year period. The United States, it seems, is firmly planted on the left side of the Laffer Curve.
Your turn. Please cite academic research or formal studies of the tax cuts that suggests that tax cuts at current US rates will increase revenue.

If you can’t produce that - and bear in mind, we are talking about actual, US-level tax rates, not abstract theories about tax rates that don’t apply here - why would you believe in something for which there is no research evidence and which even Republican economists claim is nonsense?
 
Written By: Jon Henke
URL: http://www.QandO.net
Your turn. Please cite academic research or formal studies of the tax cuts that suggests that tax cuts at current US rates will increase revenue.
You have already conceded that the study of tax rates is not a linear thing, and not something that lends itself to accurate measurement.

Every study you cite is subjective conjecture by economists, because, as you have already admitted, they can’t really pin the cause-and-effect of tax cuts on the economy with so many other factors in play.

Although certainly not perfect analogies, I think my green vegetable vs fried pork rind analogy and bithead’s football analogy are more apt.

 
Written By: Darrell
URL: http://
Shorter Darrell: I can’t.
 
Written By: Wulf
URL: http://www.atlasblogged.com
Yeah, "you can’t prove they don’t" isn’t what I might call a compelling argument. I also cannot prove that a Dodge Neon isn’t orbiting the moon, that a cat is not the current (secret!) ruler of North Korea, or that an invisible dragon does not live in my garage.

I do, however, find the unanimous weight of expert analysis, professional research and available evidence to be a far more compelling indicator than your complete inability to provide even the slightest evidence for your contention.
 
Written By: Jon Henke
URL: http://QandO.net
Yeah, "you can’t prove they don’t" isn’t what I might call a compelling argument. I also cannot prove that a Dodge Neon isn’t orbiting the moon, that a cat is not the current
Yet you’re making definitive claims which you cannot substantiate, now whining when someone point it out to you. I’m not making the unsubstantiated claims, you are. As bithead pointed out, you assume that it’s a closed matter when it’s not.
I do, however, find the unanimous weight of expert analysis, professional research and available evidence to be a far more compelling indicator than your complete inability to provide even the slightest evidence for your contention.
What is my contention ahole? YOU are the one making contentions, not me.
 
Written By: Darrell
URL: http://
I’ve offered quite a lot of substantiation. You have simply chosen to wave your hands and declare it insufficient. If Treasury, CBO and academic research, plus the considered analysis of experts in the field does not constitute substantiation, then you have effectively declared the subject unfalsifiable and the field of economics pointless.

You aren’t looking for evidence; I’m not interested in debating a person who doesn’t seem particularly concerned about facts.
 
Written By: Jon Henke
URL: http://QandO.net
I do, however, find the unanimous weight of expert analysis, professional research and available evidence to be a far more compelling indicator
... of global warming?

 
Written By: Bithead
URL: http://bitsblog.florack.us
Darrell, I think the two of you were in agreement – tax hikes retard growth to some unknown degree, tax breaks stimulate growth to some unknown degree, at times, other factors can be more important to the economy than a small tax change – but I honestly believe you misread Mr. Henke here:

Jon:
Yes, tax increases have a retarding effect on the rate of increase of economic growth. However, at current tax rates, that retarding effect is generally fairly limited over long periods.
Darrell:
Seriously, how could you possibly know with any degree of certainty how much of a detriment current tax rates have on our economic growth?
I don’t see that Jon has asserted any certainty of the overall effect of current tax rates, but rather of the historical effect of increases and decreases while at this approximate rate. Of course we cannot know what the economy would be like today if taxes had been drastically lower or higher for the last decade. But that’s not what he is saying. He is saying that we can see times in the past when the tax rate was comparable to today’s, and we can see that tax increases from this rate did not tank the economy. You and Jon have already agreed that the economy can even continue to grow after a hike - see his first comment and your second.

You are certainly correct that there are many on the left who seriously believe that govt spending is as effective or more effective in economic stimulus compared to leaving that money to be spent/invested in the private sector – in fact, Jon’s article was a challenge to the left ”to explain the causal relationship between higher tax rates and improved economic growth”, so I don’t understand why you think the two of you are not in agreement on that.

But it is also true that there are many on the right who believe that any tax cut at any level at any time will pay for itself in economic growth, when in fact the evidence clearly shows that not to be the case. That is the claim Jon’s links substantiate. Please reconsider the conversation and see if you don’t agree after all.
 
Written By: Wulf
URL: http://www.atlasblogged.com
But it is also true that there are many on the right who believe that any tax cut at any level at any time will pay for itself in economic growth, when in fact the evidence clearly shows that not to be the case. That is the claim Jon’s links substantiate.
With all respect, no, it doesn’t. Not until the question of how much of a linkage exists between tax cuts and economic growth. That’s yet to be quantified. I doubt it can be, within the current discussion.

In fairness, this knife cuts both ways; I have been saying all along that tax cuts always lead to higher economic growth. John has been saying, that’s not true... and neither statement can be proven, because there’s always the other economic factors to muddy up the water.

 
Written By: Bithead
URL: http://bitsblog.florack.us
And by the way, my reference to Global Warming is not as wisecrackish as t sounds;

Global Warming theorists have much in the way of "peer reviewed" work which came to exactly the wrong conclusions because they didn’t consdier all the evidence... such as vairence in radiation patterns from the sun, for example. They came to these wrong conclusions despite having much evdience amassed by ’experts’.

See;
Absent any other factors, does greenhouse gas affect our earth’s temperatures? Possibly. Is global warming therefore our fault? I suppose there’s no other conclusion to draw.... If.... if... you don’t consider the other factors, such as solar output. But add solar output to the context, and the whole framework changes. Add in the evidence that other planets in our solar system are rising by a similar amount... something none of the global warming studies apaprently considered, and the greenhouse gas business gets tossed out on it’s ear. (Mars must be getting warming because of those two damned SUV’s driving around up there!)

What I’m suggesting is the similarity of that situation to this in that the studies cited did not take into account the other economic stimulae and therefore similarly come to exactly the wrong conclusion about tax cuts and their economic effects.



 
Written By: Bithead
URL: http://bitsblog.florack.us
With all respect, no, it doesn’t.
Separate issue. And even if it weren’t, there are many on the right who believe that any tax cut at any level at any time will pay for itself in economic growth, i.e. the revenues lost due to lowering taxes will be made up for, when that’s been shown not to be true.

I understand your point, but from a practical (non-theoretical) matter, whatever other issues are at play, there is evidence that tax cuts are not as simple as many on the right think they are, and they cannot be expected to pay for themselves. Continuing to say that isn’t so doesn’t change the evidence available to us.
 
Written By: Wulf
URL: http://www.atlasblogged.com
I have been saying all along that tax cuts always lead to higher economic growth. John has been saying, that’s not true...
I have never said that. Apparently, you cannot distinguish between "higher economic growth" and "more revenue". The two are not the same.
 
Written By: Jon Henke
URL: http://www.QandO.net
Hmmm. MY answer ended up missing for some reason. (Shrug)
Anwyay, I mis-typed your name in a previous response... and I apologize for that.

It’s true, the concepts got crossed... likely my fault... but I submit the answers I gave here apply to each. And I also submit that since the idea of leveling the income to the federal government (IE; tax breaks pay for themselves) is a function of economic growth, the two are inexorably linked.. and that thereby my statement is still valid anyway.

And Wulf:
. And even if it weren’t, there are many on the right who believe that any tax cut at any level at any time will pay for itself in economic growth, i.e. the revenues lost due to lowering taxes will be made up for, when that’s been shown not to be true.
There again, you can’t say that, unless you’re actually accounting for all other factors. That’s an impossible task, in context. And notice, please, Ive not suggested that they always pay for themselves, for the same reason as my objection; There’s no way to judge that, given outside factors.
 
Written By: Bithead
URL: http://bitsblog.florack.us

 
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