Tax Cuts: The B.S. and the Facts
By Larry Beinhart, AlterNet. Posted November 11, 2008.
That tax cuts stimulate the economy is taken as a matter of faith, but the brute facts suggest otherwise.
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The Myth
Do tax cuts stimulate the economy?
"Yes. Tax cuts allow people to keep more of their own money. Therefore, they have more to invest and spend into the economy, and they have more money to start business and create jobs, therefore also helping to stimulate the economy." -- Yahoo Answers
"I think when people take a look back at this moment in our economic history, they'll recognize tax cuts work. They have made a difference." -- George W. Bush
The Realities
The brute facts are these:
-Large income tax cuts are followed by a bubble and then a crash.
-High income taxes correlate with economic growth.
-Income tax increases are followed by economic growth.
-Moderate income tax cuts are followed by a flat economy.
-All of this is especially true as applied to the top tax rates, the amount paid on income that exceeds the highest bracket.