Strauss: Tax Cuts Don’t Boost Economy
Posted in Main Blog (All Posts) on October 27th, 2011 4:46 am by HL
Strauss: Tax Cuts Don’t Boost Economy
Steven Strauss: It has been something of an article of faith among conservatives that the solution to America’s problems is in smaller government and lower tax rates. The argument on taxes goes something like: “We need to unleash the wealth creators, who stimulated by the prospect of more income (due to lower tax rates), will create wealth for all of us.” And, that any tax increase — for even the wealthiest taxpayers — would have catastrophic consequences. Actually the post World War II American economy provides a nice empirical test of this hypothesis — the maximum marginal income tax rate gradually declined from about 90 percent to about 35 percent. Shouldn’t this decline have lead to an explosion of economic growth as our wealth creators were unleashed? Sorry, Sarah Palin … it didn’t.
