Tax Cuts Don't Lead to Economic Growth, a New 65-Year Study Finds

Re:Tax Cuts Don't Lead to Economic Growth, a New 65-Year Stu... by melvinram on Tuesday September 18, 2012 @02:49AM (#4536745)

As you likely recognize, that's a completely irrelevant point. To demonstrate: let's try 0% tax and see how that goes.

Like other things in economics, there is an elasticity to the impact of reducing taxes. Going from 80% to 50% makes a big difference. Going from 35% to 39%? I'm not sure it packs the same punch.

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Re:Tax Cuts Don't Lead to Economic Growth, a New 65-Year Stu... by zeroonetwothree on Tuesday September 18, 2012 @03:03AM (#4536786)

A 0% tax rate would certainly work better than a 100% tax rate. After all, we had no income taxes until the 20th century.

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Re:Tax Cuts Don't Lead to Economic Growth, a New 65-Year Stu... by DannoHung on Tuesday September 18, 2012 @03:35AM (#4536866)

We had no notion of modern corporations until the mid-19th century.

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Re:Tax Cuts Don't Lead to Economic Growth, a New 65-Year Stu... by mhartl on Tuesday September 18, 2012 @03:03AM (#4536785)

Of course a 100% tax rate is absurd, but it's not completely irrelevant. In particular, I bet that the current total effective tax rate (including not just income taxes but also FICA, sales tax, property tax, and implicit taxes from market interventions such as farm subsidies and the minimum wage) is already supra-optimal for economic growth. A wise and just sovereign—such as a time-teleported and quickly-brought-up-to-speed Marcus Aurelius—would likely find that he could increase tax revenues by lowering (and streamlining) tax rates across the board.

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Re:Tax Cuts Don't Lead to Economic Growth, a New 65-Year Stu... by melvinram on Tuesday September 18, 2012 @03:36AM (#4536871)

This bet that current total effective tax rates are supra-optimal for economic growth is based on what? (I'm not agreeing or disagreeing. I'm genuinely curious on your reasoning.)

The gigantic topic of the upcoming US elections is how taxes should change, if at all. A few generic options that being presented: a) Don't change. b) Increase on those making $250k+ c) Lower taxes on everyone, while removing loop holes in aims to increase the overall base of tax payers.

The argument against option b is that it'll kill investment and economic recovery. That's what this article is disputing. It's not saying that option a, b or c is good or bad. It's saying that the argument against option b that is most often used isn't true when you look at the 65 year economic history of America.

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Re:Tax Cuts Don't Lead to Economic Growth, a New 65-Year Stu... by mhartl on Tuesday September 18, 2012 @04:07AM (#4536946)

This bet that current total effective tax rates are supra-optimal for economic growth is based on what?

It's based on intuition. That's why it's a bet, not a concrete claim.

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Re:Tax Cuts Don't Lead to Economic Growth, a New 65-Year Stu... by jeltz on Tuesday September 18, 2012 @04:58AM (#4537055)

And now we have science which indicates the bet might have been incorrect so we should reevaluate the bet.

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