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FACT: Tax Cuts ≠ Economic Growth

Discussion in 'BBS Hangout: Debate & Discussion' started by Qball, Sep 29, 2012.

  1. Qball

    Qball Contributing Member

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    http://washingtonpolicywatch.org/20...l-bias-tax-cuts-dont-lead-to-economic-growth/

    [​IMG]

    A new report from the Congressional Research Service (CRS) – Congress’s nonpartisan research arm – touched a nerve among free-market ideologues, who reacted to the wonky policy brief by accusing CRS of partisanship and calling their analysis into question. But politicians from both parties, as well as these same ideologues, often cite CRS data and reports in their own research – so what gives?

    The findings of the CRS report are neither surprising nor groundbreaking. Simply put, their analysis finds no evidence to substantiate a relationship between tax cuts and economic growth (either positive or negative), although it does find that lowering the top tax rate is associated with the increasing concentration of income at the top of the income distribution. Those two outcomes are no-brainers: trickle-down economics has already been debunked, and cutting taxes for rich people will, of course, increase their incomes.

    But perhaps the hand-wringing among these ideologues can be explained simply by looking at the question posed by the authors:
    Advocates of lower tax rates argue that reduced rates would increase economic growth, increase saving and investment, and boost productivity (increase the economic pie)… This report attempts to clarify whether or not there is an association between the tax rates of the highest income taxpayers and economic growth.

    The CRS report was seeking conclusive evidence to establish a link between tax cuts and economic growth, but found none. When the findings were published, free-market conservatives saw it as an attack on the crown jewel of their ideological position and responded accordingly. By even asking the question, the CRS report inadvertently challenged a basic tenet of these ideologues: that tax cuts unequivocally lead to economic growth.

    Instead of tax cuts, a more proven form of economic stimulus has been government investment in research and development, which has lead to breakthoughs like the internet, telecommunications, and medical advances – providing millions of jobs and boosting the American economy. Sure the CRS report debunks the link between tax cuts and economic growth, but it’s also a good reminder that tax policy and economic growth can be mutually exclusive.

    ==================

    Instead of blanket tax cuts, I like with the idea of taxing fairly to ALL corporations but then rebating via stimulus to those companies which we feel will lead to breakthroughs....which lead to the continuing economic leadership of the USA.

    Your thoughts on the article?
     
    FranchiseBlade likes this.
  2. Dairy Ashford

    Dairy Ashford Member

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    We can't afford either, I don't think I need an article to understand that. I think when Europe went bat**** crazy in the first half of the twentieth century, we delayed alot of scientific, technological, economic and infrastructural ideas that we then prudently overspent to implement in the pre-Nixon post-War era. I don't think our needs, like 30% of the South not having electric power before the TVA, are as clearly defined now and I think raising taxes to rebate companies or chase research can be fraught with corruption and waste.

    Particularly in terms of the number of casualties, I think 9/11 was too much of a freak incident to justify a decade long, multi-trillion dollar military re-mobilization; had Bush completely skipped that and told the Fed to ease up on interest rate cut, we could afford any kind of tax cut he wanted to implement and probably with DLC/blue-dog support.
     
  3. tallanvor

    tallanvor Contributing Member

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    you don't know what a fact is.
     
  4. fchowd0311

    fchowd0311 Contributing Member

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    Please enlighten us.
     
  5. ling ling

    ling ling Member

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  6. Qball

    Qball Contributing Member

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    You sure you wanna include a borderline depression in this analysis?
     
  7. Refman

    Refman Contributing Member

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    The graph also fails to account for the unusual exuberance cause by the advent of the Internet and the dot com boom. At the end of Clinton's term and the start of Bush's term, the dot com bubble burst when investors realized that many of those companies would never do anything other than hemmorage money.
     
  8. Qball

    Qball Contributing Member

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    What about the rest bush's first term and beginning of 2nd her?

    Also, do you think the dot com bubble burst at the same level of what happened in 2008??
     
  9. tallanvor

    tallanvor Contributing Member

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    Well the title of the thread would be an opinion based on a small number of data points (facts). Do you need this explained further?

    Why the hell would you live in the United States if this disgusting unethical bull**** is what you want?
     
    #9 tallanvor, Sep 29, 2012
    Last edited: Sep 29, 2012
  10. thadeus

    thadeus Contributing Member

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    lol tallanvor.

    you're completely incapable of thinking past your partisan blinders, kid.
     
  11. Pizza_Da_Hut

    Pizza_Da_Hut I put on pants for this?

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    Wait, trickle down economics doesn't work? But how can the great minds of Sarah Palin and fox news be wrong? Aren't they a modern day braintrust?!? What has this world come to?!?!
     
  12. Air Langhi

    Air Langhi Contributing Member

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    There is very little statistical correlation between taxes and gdp growth. I posted the math in another thread.
     
  13. ling ling

    ling ling Member

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    If there was no correlation between tax rate and gdp, then why do you choose to tax someone at a higher rate?
     
  14. rockbox

    rockbox Around before clutchcity.com

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    To reduce or pay down the deficit?
     
  15. thadeus

    thadeus Contributing Member

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    Trickle down economics has never worked. Ever. It's just a scam.
     
  16. Mathloom

    Mathloom Contributing Member

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    I can't believe it needs to be debated, based on the discussions I've seen here.

    Is there maybe a more convincing right-wing argument than what I see here?
     
  17. RudyTBag

    RudyTBag Contributing Member
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    It has proven over and over again that trickle down economics is complete crap...
     
  18. tallanvor

    tallanvor Contributing Member

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    There are millions of variables that go into gdp (making this 'study' dumb). Which is why comments like these from the article are incorrect:

    This position is held by no ideology. A more accurate statement would be

    The 'study' or article does nothing to disprove this so instead it argues against a position nobody holds knowing advocates for higher taxation, such as QBall, won't question it.
     
  19. BigDog63

    BigDog63 Member

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    It is very hard to isolate factors when studying something as broad as the economy. Simply looking at tax cuts vs. economic growth doesn't really indicate much at all...you have no idea what the other factors are which could be impacting the economy. Plus, tax cuts tend to be enacted as a stimulus...ie, when the economy already isn't doing so well. On the other side, note, for example, that the Clinton tax increases were enacted during a strong economic growth period. About the only thing you could conclusively say then would be that they didn't counteract it.

    Yes, I could see this. BUT the government needs to be careful. There are plenty of examples of boondoggles as well.

    The first half of this sentence contradicts the second. Yes, it is true that tax policy and economic growth can, and indeed probably often are, mutually exclusive. Which is precisely why this report doesn't really debunk...anything. At most, it shows there is no conclusive link between the two.

    Picking winners is where the government tends to create boondoggles. The entire ethanol scenario is a good example. Several of the companies the Obama admin 'picked' turned into fiasco's, as well. Better to fund indiscriminately, and let the market dictate to which ones.
     
  20. FranchiseBlade

    FranchiseBlade Contributing Member
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    Perhaps but often the supposed boondoggles are actually outliers of things that worked. For example the govt. investment in alternative and solar energy worked incredibly well. Yet people made an example of one instance where it didn't work out and tried to paint it all as a boondoggle.
     

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