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Discussion: (12 comments)

  1. I’m guessing this Global Strategy Group survey is measuring what people BELIEVE will lead to strong economic growth. So you agree that the vague platitude “provide more income opportunity for all” will lead to stronger economic growth than a supply-side tax cut? Or you don’t care because the reality is this is what people believe?

    Here is my evidence for the continued effectiveness of tax cuts – 7.2 percent GDP growth in the quarter after the dreaded “Bush tax cuts” of 2003. Will an expansion of the Child Tax Credit lead to this kind of economic growth?

    1. marque2

      Child tax credit is for other purposes – we have a shortage of children in this country and if we don’t produce enough to replace.folks who retirex- it is highly inflationary since the same amount of dollars will at some point end up chasing fewer goods and services.

      Problem is that the credit is an entirely different issue than general tax cuts. After reading the arguments above – I tend to favor Strassel

      After reading the arguments above. – I tend to favor

    2. Thomas Paulick

      In reality, there’s no evidence that the “supply-side” tax cuts had any benefit whatsoever for anyone but those whose taxes were cut. (I wish that this comment board were able to take graphical posts, so I could save other readers a lot of work.) Let’s use “growth” as a proxy for “job creation”. Here’s a reference that shows no growth resulting from lowering the top marginal personal income tax rate. The graph seems to show a small decrease in GDP growth as the tax rate is lowered. It covers the whole period of “supply-side economics”.

      http://www.businessinsider.com/correlation-tax-rates-gdp-2012-3

      Here’s a reference that shows the same trend when the tax rate on capital gains is lowered:

      http://www.forbes.com/sites/leonardburman/2012/03/15/capital-gains-tax-rates-and-economic-growth-or-not/

      In this graph, the trend is unambiguous: lowering the tax rate on capital gains lowers the growth rate of GDP. This graph, too, covers the whole period of “supply-side economics”.
      Here’s a graph of the trend in corporate tax rates. I couldn’t find any graph already comparing this with the corresponding GDP growth, but it’s easy to plot a comparison graph from this one and the GDP growth data from one of the other graphs. Again, it appears that lowering the corporate tax rate lowers the GDP growth rate.

      http://ih.advfn.com/news/fiscal-cliff-2013-united-states-fiscal-cliff-impact-on-gdp

      Notice that none of this information comes from the “Huffington Post”, or The Nation, or Mother Jones, or “The Daily Kos”, or “Think Progress”, etc.

      The supposed “stimulus” effect of tax cuts for the rich on “job creation” is evidently pure ideology, with no relation whatsoever to the world in which we actually live. I can’t see how on earth either the common good of the nation or the people responsible for Republican electoral success can benefit by adopting a set of fictions as a starting point. At the very least, anyone who believes the claims made for “supply-side economics” boxes himself into a corner.

      .

  2. “Here is my evidence for the continued effectiveness of tax cuts – 7.2 percent GDP growth in the quarter after the dreaded “Bush tax cuts” of 2003. Will an expansion of the Child Tax Credit lead to this kind of economic growth?”

    No. But that sort of proves the point, when you correlate the stunning “success” of the Bush tax cuts with the above chart, which shows household income stagnant or declining over that exact same period.

    The hard fact is that while tax cut-fueled economic growth might, at one point, have improved things for everyone, including the middle class, that is no longer the case. Those two formerly-linked items – the wealth of the nation and the wealth of the middle class – have been demonstrably decoupled. The deep reluctance of the conservative movement to acknowledge this is a form of intellectual cowardice. It effectively says, “We don’t have any new solutions for this problem, but meanwhile, let’s keep pushing the old solution.”

    Doing that doesn’t only make conservatives seem divorced from reality, it makes voters suspicious of conservative ideas and motives, as the above survey indicates.

  3. David Boyd

    I am not unsympathetic to ‘reform conservatives’. I do believe there is a new political AND economic context that requires focusing on some things that Reagan did not have to focus on. Among these are poorly tuned free trade policies; destructive environmental regulation; Obamacare excesses; and a Federal Reserve that punishes savers and trashes the dollar; and an uncontrolled border. So, a few new points of emphasis in prescribing policy do seem warranted. However, I agree with K Strassel–tax cutting shouldn’t be abandoned. Particularly in the area of corporate taxes. We just need to steer the argument away from the goofy 1 percent types.

  4. We need a new understanding of economics which is vital if humanity is to survive in the future. Transfinancial Economics may well be the answer whether we like it, or not. Click on the name above for more info.

  5. Yeah, republicans always win when the talk taxes. The middle class is just hell bent on pushing through those corporate tax cuts.

  6. Mittymo

    (a) health care costs are rising faster than income and gobbling up wages,
    (b) the nation’s $600 billion in annual K-12 spending is failing to prepare students for the modern job market,
    (c) family life in middle-class America is growing increasingly fragile.

    In case you didn’t notice, all three are the result of growing government involvement. Fannie, Freddie, & HUDs’ easy credit caused housing prices to skyrocket; Medicare & Medicaid caused medical costs to skyrocket; easy credit for college students caused education costs to skyrocket; and liberal doctrine has corroded our culture, tearing at the fabric of America’s family life.

    Get a clue. Dial government back to the early 1990s, because today’s government is choking & corroding everything we once held dear.

  7. Blackswann

    Child tax credit expansion may have an unintended consequence to propagate more fatherless households. Let’s be careful with this policy idea

  8. Brendan

    I will have to read your book to see where “Providing more income opportunity” and “cutting regs on businesses” stand. If its a central premise of your book, then Strassel is wrong – because cutting regs by necessity demands slashing the permanent bureaucracy (look at the EPS and FDA and how they insinuate themselves into every economic activity like a parasite).

    A better argument than even a child tax cut is to create either a flat tax or a fair tax – both of which will allow for the removal of the IRS as an agency of the police state (it won’t eliminate it, but it will eliminate its political function).

    And finally, where does pushing medical R&D come in? I hope that AIE is pushing that advancing medical science as fast as possible (and allowing companies who do this sort of research huge tax incentives if the discoveries reduce medicare costs) should be a component of a future conservative health care initiative.

  9. Thomas Paulick

    But I will say this about politics: If the 2016 Republican nominee wants to make his big economic idea cutting corporate taxes at a time when corporate profits are at their highest level in 85 years and worker compensation is at its lowest level in 65 years as a share of national income … well, good luck with that. Not only does that intuitively seem like a losing message — and recent history seems to support that intuition — but there is also this recent survey from Global Strategy Group:

    What a huge (and pleasant) surprise to see this emerge from your keyboard (and head…).

  10. Its hard to take seriously a survey which rates so highly “Increase the Minimum Wage” and “Guarantee All Workers a Living Wage.” Obviously the respondents do not comprehend that minimum wage floors (or living wages) benefit the already employed, to the detriment of those priced out of the labor market, and that paying more a good or service than it is worth (in market terms) is redistribution via a hidden tax. At their most basic effects, such policies subsidize less productive work, distort the labor market, and result in misallocation of human capital.

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