Quote:
Originally Posted by Bluesman
That was AWESOME.
And my take-away was that lower tax rates are GOOD, in almost (not all!) cases.
That's what I was a-sayin'. A big, burly, robust, and mostly-tax-unburdened economy is BETTER, all other thangs bein' equal. I got the part about the margins, and I think you'll see that I stipulated that my own bad self. High, SUPER-high MARGINAL rates are simply destructive.
Cut rates, and we're better off. Not always, I grant you, but I never said that. A bigger economy - a product of the right kind of tax cuts - gives a bigger revenue base.
CUT RATES! It pays...unless it doesn't, like from a low rate to a nominally lower rate. But...CUT RATES ENOUGH!
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Remember, the question is an empirical one, which is where are we on the Laffer Curve - between A and B or B and C, and the studies out there that I've seen indicate that we are between A and B, e.g.,
"In the long run, about 17 percent of a cut in labor taxes is recouped through higher economic growth. The comparable figure for a cut in capital taxes is about 50 percent."
So, the question of tax cuts paying for themselves, while theoertical possible, is not the reality for recent tax cuts.
Thus, it comes back to the need to fund expenditure levels, and simply cutting taxes without cutting spending by a similar amount is bad unless you have plenty of growth occur outside the incentives provided by the tax cuts.