Do Tax Cuts Lead to Economic Growth? - 3 views
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Anna Schutte on 17 Sep 12This piece begins to shake out the specific effects tax cuts have on economic growth. With so much general back and forth arguing about this, it is useful to look at the graph included in this article and try to understand what it really tells us. The graph that maps the economic growth between 1987 and 2005 clearly shows that the economy grew dramatically after the Bush and Clinton tax increases and dropped dramatically after the Bush tax cuts. But, what is most interesting is the discussion about other factors affecting the economy. Paul Ryan says that the increase was affected by the tech boom, lower trade barriers and peace. According to the conservative economists, the economy had already slowed before Bush's tax cuts and surprisingly, Glen Hubbard, who helped write Bush's plan is quoted saying that, " tax cut's don't translate quickly into higher growth. According to the Tax Policy Center, a "highly regarded" non-partisan group, "it's hard to make the argument that tax rates have a big effect on economic growth." So, this makes me wonder, what exactly are Ryan and Romney proposing and why do they think it will improve the economy? One very interesting point that is made is that tax cuts did make a difference when to top marginal rate was 70%..who knew that it was ever that high. According to this article, between, 1940 and 1980, taxes were that high at tech top. That is very different than today's 35%.
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Eli Melrod on 25 Sep 12I don't have much to add here, but I fully support at tax rate of 70% or so after someone's income has reached a certain mark. That will never happen in America, but if we look at a lot of other countries in the world with high taxes, they have far fewer expenses to pay for (i.e. education, healthcare, etc.)
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cody s on 25 Sep 12This is interesting. It's important to be thinking that there obviously were other factors going on during all these periods, but with all the discussion of - like John says - whether tax cuts actually work or not, this graph is an interesting way of understanding their role in the economy.