Tuesday, November 30, 2010

New Economic Research Finds Tax Cuts And Not Stimulus Spending Promote Economic Growth

From "Why the Spending Stimulus Failed: New economic research shows why lower tax rates do far more to spur growth." by Michael Boskin in the Wall Street Journal:
economic theory, history and statistical studies reveal that more taxes and spending are more likely to harm than help the economy. Those who demand spending control and oppose tax hikes hold the intellectual high ground.[Emphahsis Added].
Macroeconomics since Keynes has incorporated the effects of longer time horizons, expectations about future incomes and policies, and incentives (including marginal tax rates) on economic decisions.
based on the best economic evidence, we should reject increased spending and increased taxes.

If anything, we should lower marginal effective corporate and personal tax rates further (for example, along the lines suggested by the bipartisan deficit commission's Erskine Bowles and Alan Simpson). We should quickly enact an enforceable gradual phase-down of the spending explosion of recent years.
Read the complete Wall Street Journal article here.

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