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qbill (not verified) says:
Ross,
Your understanding of macroeconomics is apparently fairly limited and your analysis is excessively restricted by it.
Many factors contribute to economic growth. When marginal tax rates are excessive, a tax cut can, but will not necessarily lead to economic growth. However for tax cuts to be the much posited engine for economic growth, current tax rates have to be high enough to actually restrict growth.
An example in point is the European Union. Their economic growth and strength of their currency has exceeded ours on average for at least the last decade. This has occurred at very much higher marginal tax rates. Comparatively, if lower tax rates alone was the answer, our economy should be running on nitromethane. It isn't and has not been.
Another case in point is the post WWII boom in this country. Now, according to the theory, high tax rates stifle economic growth and low tax rates promote it. However, it is important to remember that this period in US history was a time of the highest tax rates ever on record. Marginal tax rates on the wealthiest few were as high as 90 percent during this period. When Kennedy cut taxes, it is important to remember that it was a cut from historically high rates.
A major component of economic growth in any economy, and in particular ours, is government spending. Government spending accounts for about 30 percent of GDP in any year and has done so for a very long time. In short, it is roughly one third of our total economy.
Now when you do what Reagan did, specifically cut taxes and raise government spending, you get the synergistic effect of a massive demand side stimulus combined with the creation of massive amounts of new money (deficit spending). Given the massive size of the actual demand side stimulus provided by Reaganomics, economic performance was actually fairly poor, some growth occurred but actual wages for workers stagnated to declined. The reason for this is that the wealthy, instead of building new industries, got into stock arbitrage deals and asset speculation, in short, the rich man's sport.
Reaganomics counted on giving money to a vast and aspiring group of Henry Fords, but ended up giving the funds to a sad sack of Kenneth Lays.
On the Bush tax cuts, it took 7 years just to get back to the revenue level collected in the year prior to them taking effect. Current estimates indicate that the economic growth stimulated by them resulted in a return of roughly 10 cents on the dollar spent. As the study in the original article states, tax cuts have proved to be a very poor way to stimulate economic growth.
Ross,
Your understanding of macroeconomics is apparently fairly limited and your analysis is excessively restricted by it.
Many factors contribute to economic growth. When marginal tax rates are excessive, a tax cut can, but will not necessarily lead to economic growth. However for tax cuts to be the much posited engine for economic growth, current tax rates have to be high enough to actually restrict growth.
An example in point is the European Union. Their economic growth and strength of their currency has exceeded ours on average for at least the last decade. This has occurred at very much higher marginal tax rates. Comparatively, if lower tax rates alone was the answer, our economy should be running on nitromethane. It isn't and has not been.
Another case in point is the post WWII boom in this country. Now, according to the theory, high tax rates stifle economic growth and low tax rates promote it. However, it is important to remember that this period in US history was a time of the highest tax rates ever on record. Marginal tax rates on the wealthiest few were as high as 90 percent during this period. When Kennedy cut taxes, it is important to remember that it was a cut from historically high rates.
A major component of economic growth in any economy, and in particular ours, is government spending. Government spending accounts for about 30 percent of GDP in any year and has done so for a very long time. In short, it is roughly one third of our total economy.
Now when you do what Reagan did, specifically cut taxes and raise government spending, you get the synergistic effect of a massive demand side stimulus combined with the creation of massive amounts of new money (deficit spending). Given the massive size of the actual demand side stimulus provided by Reaganomics, economic performance was actually fairly poor, some growth occurred but actual wages for workers stagnated to declined. The reason for this is that the wealthy, instead of building new industries, got into stock arbitrage deals and asset speculation, in short, the rich man's sport.
Reaganomics counted on giving money to a vast and aspiring group of Henry Fords, but ended up giving the funds to a sad sack of Kenneth Lays.
On the Bush tax cuts, it took 7 years just to get back to the revenue level collected in the year prior to them taking effect. Current estimates indicate that the economic growth stimulated by them resulted in a return of roughly 10 cents on the dollar spent. As the study in the original article states, tax cuts have proved to be a very poor way to stimulate economic growth.