Originally posted by: Acanthus
Cutting taxes for the rich does not stimulate the economy.
Cutting capital gains and/or the highest tax bracket does not help do anything but make the rich more rich.
Do you agree or disagree that capital is highly mobile?
Do you agree or disagree that tax rates/policy can strongly influence the flow of capital?
Do you agree or disagree that an influx of capital can stimulate an economy, or that a lack of capital can damage an economy?
If you can't reasonably and persuavely disagree with the above, you can't disagree that, in general, cutting taxes helps an economy. The only real question is what rate are you at before proposing a cut. If your rates are already low, particularly in comparison to your economic competitors, there won't be much benefit.
Around here it's pretty common to to keep the analysis strickly pertained to US data, that's much harder and more deceptive than most realize (or want to admit), often these things take time to play out. If you want a real comparison, look to different countries and compare among each other. Those countries that raises taxes above that of others suffer; capital is international.
Originally posted by: Acanthus
http://www.mediafire.com/?nmxjmy4nzmm
This is a brief paper i wrote on the failure of supply-side economics.
If you would like to dispute any of the data, i can directly link the data that i drew my conclusions from.
My goal is to put to rest the fallacy that cutting taxes always helps the economy. This is not the case and even back in the Regean days was not the ploy they were trying to tell the public. Regeanomics was based on the fact that in the very specific case of the times, under those very specific conditions, economists thought that cutting taxes would increase tax revenue. This has somehow become the bastardized supply-side economics that republicans push today.
Under Reagan I recall the idea that cutting taxes generates additional federal revenue as 'front-and-center' and widely recognized. You seem to say otherwise? If you're just now getting around to writing acedemic papers you weren't likely of age back then, so where do you get this idea from?
This is likely as much a philosophical argument as economic, but one can make a very good argument " that cutting taxes always helps the economy". However, "always" wouldn't be a word I would choose. Are you sure these people used that word, or did you interject it yourself? Because I believe tax policy does affect the economy there would be circumstances where a tax cut is inappropriate, e.g., when an economy is 'overheated' I see no good reason to cut taxes then. Why add to the existing problem?
If your discussion here is prompted by the recent discussion of stimulus, I must now agree with the Republicans that broad tax cuts (why do you frame this in terms of tax cuts for the "rich"? Odd, your politcal bias is showing I'm afraid) are superior to increased government spending.
While I agree with some of the increased government spnding, I still believe tax broad tax cuts are far more powerful as stimulus than gov spending. As an example here's what the recent, heavily weighted toward gov spending, stimulus is doing in my area:
According to my local paper, and mind a you 'liberal' one (it's owned by the NYT), my county was awarded a road paving project of some millions. According to the paper (1) it's not even a repaving project really needed and was not rated as "high" on any priority list, but it happens to be 'shovel ready', and (2) it is estimated to put a grand total of 6 people to work raking or operating machinery for a limited time.
That's stimulus? really?
Where will those 6 people spend their money? Can they get around to every store, shop or business to spend that money? Of course not. Who is to say they even live here?
I suppose the owner of the asphalt/paving company made some good money. Mind, you wages are very small fraction of the funds expended for paving. How many businesses can the owner(s) of the asphalt/paving company get around to shop at? Not many. Again, who is to say that they even live here?
What if those millions were spread around via tax cuts to the residents here (as it would were if it was a broad tax cut)? Don't you suppose with so many residents included that every business here could've received some of this stimulus? Then every business could buy more, or pay more to people/emplyees who would've done likewise.
As it stands now all we have for sure is traffic tie-ups and a not-really-needed paving job. It's d@mn hard to call that any kind of stimulus and keep a straight face. Not even NYT paper thinks much of it.
Fern
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