Quote:
Originally Posted by spence
There is no explicit correlation between cutting taxes and growth. It is a myth.
Posted from my iPhone/Mobile device
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Depends on which "study" you prefer to believe. Most studies don't find an "explicit" correlation between taxes and growth regardless if whether or not taxes are raised or lowered. So "explicit" correlation is not a useful metric.
You may argue that other factors contributed to, or were the reason for, growth when the taxes were also lowered. But those other reasons were not a result of "explicit" correlation because they, too, were also historically in play when growth did not occur or happened less robustly. But the four times there was a significant lowering of federal business taxes there was significant economic growth.
Various "studies" show that lowering corporate tax rates have a greater impact on creating growth than lowering income or consumption or property tax rates. Other studies disagree. Again, when it was tried at the federal level, it created growth, and "other" factors were not consistently present in each case. That may not be an "explicit" correlation, it may be and "implicit" correlation, or just a correlation. But a consistent one.
Also, when I refer to "conservative" economic theory (basically updated classical economics), I'm not referring to Republican policies. Many Republican tax proposals are a mix of some "conservative" (classical) and some, often a lot, of Progressive ideas. As we are witnessing now, the Republican tax plan has been morphing, along the way to finalization, from a more "conservative" plan to an equally or more Progressive one as the planners keep caving in to political pressure.
Here is an article by the Tax Foundation supporting the theory that lowering taxes, especially corporate taxes, promotes growth:
https://taxfoundation.org/what-evide...xes-and-growth
Also, the article that I previously posted, which gives a good foundation on which type of programs government should and must spend tax revenue, should be read if you didn't already do so:
https://www.thoughtco.com/effect-of-...growth-1146370
Other articles disagree--but by theoretical or conjectural, not "explicit," reasoning. One of the most empirical reasons for disagreement is not necessarily that lowering tax rates does or doesn't generate economic growth, but that it grows income inequality. But, again, there isn't necessarily an "explicit" correlation between income inequality and economic growth, because "other" factors can always be pointed to as causation.