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Originally Posted by Jim in CT
Spence, a rational person could make a strong case that the Bush tax cuts led directly to the wealthy paying more taxes. You see, a cut in tax rates lets people keep more of their money. When that happens, wealthy folks have more incentive to take chances by investing in growth. When those investments bear fruit, those wealthy people have to pay taxes on the gains. Therefore, a cut in tax rates could easily trigger an increase in investment by wealthy folks. That argument has no "spin" whatsoever, and it sounds fairly reasonable to me.
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According to Detbuch above this takes time for the incentives to ferment. I thought you had remarked it was more instantaneous...I think you're mixing your ideas of what "paying more taxes" really means.
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Now Spence, perhaps you could tell us all why, in your opinion, lowering tax rates DOES NOT encourage investment in growth? Enlighten me, Spence. Please tell me how a cut in tax rates does NOT encourage people to invest more...
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The CBO has published numbers on this exact topic and I remember reading their estimates that a dollar in tax cuts produces between 10 and 40 cents of economic benefit.
This isn't a great deal...
Why? Because those the rich often save it rather than spend or invest, and even if they invest a lot of that activity is to make money in speculative markets that don't directly lead to job growth.
More importantly...
We are currently running a very large budget deficit. A cut in taxes therefore has to be PAID for by BORROWING more money. So not only does your tax cut generate a fraction of benefit for the investment, a lot of that benefit is wiped out to service the loan on the debt necessary to create the tax cut.
-spence