Tax cuts good for growth?

[question everything]

StarTribune.com

Tax cuts good for growth?

You often hear the claim, but you don't often hear the evidence for it. And there's a reason.

Douglas Stene

Published: June 19, 2007

(snip)

The commonly accepted measure of economic growth is the Real Gross Domestic Product (GDP). You can get the truth about tax cuts and economic growth by comparing the different decades. If tax cuts were an economic miracle, you would expect to see more economic growth in the decades of tax cuts and slower growth when taxes were increased.

The real GDP grew 36.9 percent during the '70s, before tax cuts were the fad. During the '80s, after the Reagan tax cuts the real GDP grew 37.8 percent, just slightly better than the '70s. During the '90s, after the Bush I and Clinton tax increases the real GDP grew 38 percent, even better than the '80s. During this decade after the Bush II tax cuts, the real GDP is projected grow 30.7 percent.

The fact is that the best economic growth came after the Bush I and Clinton tax increases, and the least economic growth is projected to be this decade after Bush II tax cuts. One obvious reason for this is that the tax cuts are offset by the borrowing necessary to replace the lost revenue.

What has increased with the tax cuts is the gross federal debt. The gross federal debt tripled in the '80s after the Reagan tax cuts. The debt continued to grow in the early '90s, but was brought under control by the end of that decade. In this decade, the Bush administration projects that we will add $5 trillion in debt and the annual gross interest on that debt will exceed $500 billion a year by 2010. We are not cutting taxes, we are just passing them on to the next generation.

(snip)

http://www.startribune.com/562/story/1253721.html

[liberal N proud]

1. The republicon theory on tax cuts has always been "trickle down"

When in fact, the tax cuts were to help the wealthy under guise that the tax cuts for the wealthy would trickle down to the middle and lower incomes.

These facts pretty much debunk the trickle down theory.

[unpossibles]

3. I HATE the trickle down nonsense

if anything, money trickles up - if you put more money in the hands of the people who actually spend it - because they have no choice - it goes back into the system and trickles up to the various business owners.

The only trickle down effect I've ever experienced is when they are pissing on my back, if you'll excuse the vulgarity.

[liberal N proud]

4. That has always been my observation

The economy grows when the little guy has a little more to spend than he did yesterday.
The wealthy invest or put it in savings accounts, usually off shore. The middle and lower income people will take any increase and pump it right back either out of need or desire to improve the conditions in which they live.

But the old line about the wealthy investments trickling down has never been true.

[Solo_in_MD]

2. The Irish Tiger is also illustrative in this area

[gravity]

5. It could be good for growth

but I believe it's emphasis is overstated, just so they can lower taxes more. If the marginal tax rate is too high, like 80%, it could definitely limit growth and investment, but with the rates as low as they are today, they aren't much of a problem.

There are many factors that cause the economy to grow, so saying it's just taxes is ignoring many other factors that could have caused the growth instead. Usually the people making these claims have agendas of their own, like justifying raising or lowering taxes, so you really can't trust them.

[New Era]

6. Trickle down economics...

Is there any closer way to say pissing on poor people?

[Bravo Zulu]

7. The rich people get big tax cuts

and the poor people get big wars!

[Odin2005]

8. The Reich-wingers hate proper Keynesian economic theory too much to care about those pesky facts.

It's all about the Almighty and Holy Free Market to them. The Theologians of the Free Market don't care about the consequences, they treat the Holy Free Market as an end unto itself.