The Soapbox

HoosQ

Joined: 08/13/1998 Posts: 2499
Likes: 3382


So, those tax cuts did not get made in a vacuum


You are probably just as aggravated as I am that there was also a substantial increase in spending done at the same time. That spending doesn't just go away into nothingness. It generates income. Fiscal policy of this sort is quite effective at creating expansion, that is one of the reason politicians like it so much. That income gets taxed. If you take the average tax rate, multiply it by the increased spending you get the increased revenue associated with that spending. It more than off-sets the revenue growth. The remainder after that subtraction would show you whether the tax cuts themselves increased revenue and they did not.

Even back in the early 80s when I was at UVA the vast majority of economists did not believe in "supply-side economics.." You really have to have a supply curve bending back onto itself for it to work. Tax cuts are more effective during recessionary times relative to expansionary, but they never pay for themselves alone. No one has ever tried tax cuts alone where it is easier to see the impact. Maybe (I bet we both doubt this) politicians are smart enough to know the result. More likely they just love spending money.

Now supply side growth is a bit of a nirvana because you can get non-inflationary growth out it. Best way to shift the supply curve is through investments. Education and infrastructure are especially good at this. One of the reasons I was so behind the infrastructure bill that was discussed and forgotten at the beginning of this term.

There is a pretty good discussion of supply-side in the link. Plus it is a pretty cool site overall.

(In response to this post by Hoodafan)

Link: Cool site with lots of good data.


Posted: 10/11/2019 at 10:00AM



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Current Thread:
 
  
Yeah, about those deficit busting tax cuts....... -- Hoodafan 10/10/2019 6:42PM
  So, those tax cuts did not get made in a vacuum -- HoosQ 10/11/2019 10:00AM
  Oh my gosh. You’re trying this again? ** -- 111Balz 10/10/2019 9:43PM
  Much greater growth than expected? Lol. ** -- HooAskedYou 10/10/2019 7:29PM
  You cant tame the beast and get reelected...sadly ** -- Tuckahokie 10/10/2019 7:09PM
  Can you draw pictures to help Shen and Laz? ** -- TpkeHoo 10/10/2019 6:46PM
  Do you think this would do it? -- Hoodafan 10/10/2019 6:55PM
  HoosQ2? ** -- Tuckahokie 10/10/2019 7:15PM

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