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Cut tax is not the best way to solve economic problem

samuel3578

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Republican always suggests cut tax, reduce market intervention to help the economic recovery. Theatrically let the market allocate resources is the best, however, under the situation nowadays, it may not true.

People will aim at higher revenue in normal situation. If the government cut tax, will they spend money and help recover the economy?

To individuals, even if the taxes being cut, they may not spend money if they think the future is pessimistic. The cost for spending is higher than what than the benefit. It cannot help the economy. Rich people may use money to invest oversea. It cannot help economic recovery. Actually, it is common for those people to invest oversea.

To businessman cut tax can reduce their cost, but it does not equal that they are willing to employ more people or increase investment. If they found employer can finish works, there are no reason for them to employ more people even the tax are cut. It cannot help to decrease the unemployment rate.

Cut tax is also a cost to country. It is an explicit expenditure to nation. In long term, the government income decrease, it increases the difficulties for them to repay those debts. Everyone care for our revenue, so it is a must for us to against the government to raise taxes at that time. Take a look at Greek. It may create other confident cries that time, such as the debts may slow down country economic cries. It is not suitable for a country with large amount of debts to cut tax.

In most of the situation, market is the most efficient way to allocate resources. However it is the situation that the resources should mainly focus on recover local economy, even they may not be most efficient. That’s why the government current policy and plans for build more role, having more government lead economic plan are most suitable. Republican suggestion is not the best way to help economic recovery.
 

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samuel said:
People will aim at higher revenue in normal situation. If the government cut tax, will they spend money and help recover the economy?

Probably, although it might not be ideal. The problem exists when government tries to supersede the role of funding situations that fall through the cracks of market failure and attempt to put their fingers in as many pies as they can.

Government spending for the purpose of economic recovery is incredibly short-term. Excessive public sector expenses ultimately lead to stagflation and skewed market wage equilibria that causes inefficiencies. Look at Greece. They're a great example of what happens when you eliminate wage competition on a national scale and perpetuate New Deal-type crap on far too large a scope.

To individuals, even if the taxes being cut, they may not spend money if they think the future is pessimistic. The cost for spending is higher than what than the benefit. It cannot help the economy. Rich people may use money to invest oversea. It cannot help economic recovery. Actually, it is common for those people to invest oversea.

Outsourcing catches a lot more flak than it deserves. First of all, international investment only doesn't assist in economic recovery if you judge wealth based on GDP, which is not always an accurate meter. Second, usually only one or two segments of the supply chain involve overseas. Production may occur overseas, but what about distribution-based costs? Marketing/advertising? The vast majority of value-added segments create domestic revenue and local jobs.

To businessman cut tax can reduce their cost, but it does not equal that they are willing to employ more people or increase investment. If they found employer can finish works, there are no reason for them to employ more people even the tax are cut. It cannot help to decrease the unemployment rate.

This is only true during this administration. Tax cuts granted by the Obama regime did not loosen corporate coffers because it offered absolutely no assurity or confidence that he wasn't about to gut-punch them. History has shown that through Reagan and Clinton administrations, treasury money became a lot more loose, which was a driving factor behind recoveries involved in those time frames. Corporate infrastructure and technological easements created a lot of boons for Clinton to hang his hat on, even if he wasn't directly responsible for it. History will judge him very favorably for things that, essentially, he was no part of. The greatest thing Clinton did in his administration was that he didn't trip over his own feet. Even though increasing the capital gains tax to almost double what it was stifled things a bit, he skyrocketed off of the private sector doing its thing.

Cut tax is also a cost to country. It is an explicit expenditure to nation. In long term, the government income decrease, it increases the difficulties for them to repay those debts. Everyone care for our revenue, so it is a must for us to against the government to raise taxes at that time. Take a look at Greek. It may create other confident cries that time, such as the debts may slow down country economic cries. It is not suitable for a country with large amount of debts to cut tax.

It's astonishing that you view Greece in a positive light. Most of Europe is a shining example of what not to do. What we call a massive unemployment crisis in America would be the status quo for most European nations. When you have countries like Greece, Germany, and Ireland with consistent unemployment in the teens and even low 20s at times, the easy (and wrong) solution is for government intervention to go and patch up all these holes in the dam - easily ignoring that more holes come to the dam when you fix those. Europe's AD/AS (that's aggregate demand and aggregate supply) curves are laughable when compared to those of America or southeast Asia. Their mixed economies and "tax first" mentality is what keeps them barely above water.

In most of the situation, market is the most efficient way to allocate resources. However it is the situation that the resources should mainly focus on recover local economy, even they may not be most efficient. That’s why the government current policy and plans for build more role, having more government lead economic plan are most suitable. Republican suggestion is not the best way to help economic recovery.

And here you lose me totally. You will never see me push for resource allocation that is deliberately inefficient.
 

Missed AB

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Republican always suggests cut tax, reduce market intervention to help the economic recovery.
Conversely, would that mean Deomcrats always suggest taxing more and spending more will help the economic recovery?

Theatrically let the market allocate resources is the best, however, under the situation nowadays, it may not true.
Why not?

To individuals, even if the taxes being cut, they may not spend money if they think the future is pessimistic.

Also if you have 5 dollars more in your pocket, you may or may not spend it. If you don't have 5 dollars in your pocket you will NOT spend it.

Rich people may use money to invest oversea. It cannot help economic recovery. Actually, it is common for those people to invest oversea.
Apple has apx 25K workers "over seas". They have about 25K workers in the US. "Designed in California, Made in China". Who's going to buy the 900 dollar made in USA Ipod? If there were not iphones, ipads, ipods, would Apple have 25K employees in the US?

The benefits of the US economy are felt due to advancements made "over seas". Imagine a world where there was no investment in other countries. How much would you pay for a gallon of gasoline, or any other product which was manufactured in the US. The reason you can go to walmart and save money is because of these over seas investments.

To businessman cut tax can reduce their cost, but it does not equal that they are willing to employ more people or increase investment. If they found employer can finish works, there are no reason for them to employ more people even the tax are cut. It cannot help to decrease the unemployment rate.
If I want my company to GROW, it takes increased capital. If my company does not hire more people, then I need to have more technology which means buying things from other people who may hire more people. I ship more, I need more boxes which are produced by people... If you look at invididual companies which do not hire more people, if they are going to grow, it requires more money to be put into the system. It requires more orders. It requires YOU to have more money to buy MY products. I may or may not hire the individual, but the increased commerce will lead to more jobs as somewhere along the transaction lines there will be shortages which need to be filled. The more people working, the more people spending, the more tax revenue is collected via both sales tax and income tax.


Tax cut is also a cost to country. It is an explicit expenditure to nation. In long term, the government income decrease, it increases the difficulties for them to repay those debts. In long term, the government income decrease, it increases the difficulties for them to repay those debts. Everyone care for our revenue, so it is a must for us to against the government to raise taxes at that time.
Lets agree on 2 things. First, a tax of 0% would not produce income for the government because there would be no income. Second, a tax of 100% would not produce income for the government because there would be no incentive to have a business or go to work because no one works for free.

On the one side as you increase taxes, the government will increase revenue, and on the other side as the government decreases taxes it will increase revenue. If you can see how the that works then you can understand on why finding the optimal balance is important for sustainability.

Next, if you expand on what you just learned above. An economy with 100% taxes will have very little commerce, and an economy with 0% taxes would have the most commerce possible. As taxes increase, commerce transactions are slowed. In times of economic hardships, it is important to reduce taxes to assist in stimulating commerce. In the good times it is important to increase taxes to recoup the expenses from the previous downturn in the cycle.

As for the second part of the quote, it is important for the government to have a long term balanced budget plan, and not be concentrated on what each individual year is. There will be good years and bad years. Long term.

Take a look at Greek. It may create other confident cries that time, such as the debts may slow down country economic cries. It is not suitable for a country with large amount of debts to cut tax.
The greek problem exists because one, they did not have a long term balanced budget plan. Two they are not able to print their own money. If there was a Greek currency, then there would be no problem with Greece paying it's debt, but they must rely on other countries in the EU to provide the increased money supply.
 

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Republican always suggests cut tax, reduce market intervention to help the economic recovery. Theatrically let the market allocate resources is the best, however, under the situation nowadays, it may not true.

People will aim at higher revenue in normal situation. If the government cut tax, will they spend money and help recover the economy?

To individuals, even if the taxes being cut, they may not spend money if they think the future is pessimistic. The cost for spending is higher than what than the benefit. It cannot help the economy. Rich people may use money to invest oversea. It cannot help economic recovery. Actually, it is common for those people to invest oversea.

To businessman cut tax can reduce their cost, but it does not equal that they are willing to employ more people or increase investment. If they found employer can finish works, there are no reason for them to employ more people even the tax are cut. It cannot help to decrease the unemployment rate.

Cut tax is also a cost to country. It is an explicit expenditure to nation. In long term, the government income decrease, it increases the difficulties for them to repay those debts. Everyone care for our revenue, so it is a must for us to against the government to raise taxes at that time. Take a look at Greek. It may create other confident cries that time, such as the debts may slow down country economic cries. It is not suitable for a country with large amount of debts to cut tax.

In most of the situation, market is the most efficient way to allocate resources. However it is the situation that the resources should mainly focus on recover local economy, even they may not be most efficient. That’s why the government current policy and plans for build more role, having more government lead economic plan are most suitable. Republican suggestion is not the best way to help economic recovery.

It seems that you disagree with giving a tax cut to anyone. Said another way, you would prefer we give everyone a tax increase over what they paid in 2010. In essence a reverse stimulus package. Interesting way to look at things. If the President refuses to sign off on spending cuts you are probably right, we will have to raise even more tax money maybe through a VAT.

This may well be the coice in the 2012 elections.
 

samuel3578

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Probably, although it might not be ideal. The problem exists when government tries to supersede the role of funding situations that fall through the cracks of market failure and attempt to put their fingers in as many pies as they can.

Government spending for the purpose of economic recovery is incredibly short-term. Excessive public sector expenses ultimately lead to stagflation and skewed market wage equilibria that causes inefficiencies. Look at Greece. They're a great example of what happens when you eliminate wage competition on a national scale and perpetuate New Deal-type crap on far too large a scope.



Outsourcing catches a lot more flak than it deserves. First of all, international investment only doesn't assist in economic recovery if you judge wealth based on GDP, which is not always an accurate meter. Second, usually only one or two segments of the supply chain involve overseas. Production may occur overseas, but what about distribution-based costs? Marketing/advertising? The vast majority of value-added segments create domestic revenue and local jobs.



This is only true during this administration. Tax cuts granted by the Obama regime did not loosen corporate coffers because it offered absolutely no assurity or confidence that he wasn't about to gut-punch them. History has shown that through Reagan and Clinton administrations, treasury money became a lot more loose, which was a driving factor behind recoveries involved in those time frames. Corporate infrastructure and technological easements created a lot of boons for Clinton to hang his hat on, even if he wasn't directly responsible for it. History will judge him very favorably for things that, essentially, he was no part of. The greatest thing Clinton did in his administration was that he didn't trip over his own feet. Even though increasing the capital gains tax to almost double what it was stifled things a bit, he skyrocketed off of the private sector doing its thing.



It's astonishing that you view Greece in a positive light. Most of Europe is a shining example of what not to do. What we call a massive unemployment crisis in America would be the status quo for most European nations. When you have countries like Greece, Germany, and Ireland with consistent unemployment in the teens and even low 20s at times, the easy (and wrong) solution is for government intervention to go and patch up all these holes in the dam - easily ignoring that more holes come to the dam when you fix those. Europe's AD/AS (that's aggregate demand and aggregate supply) curves are laughable when compared to those of America or southeast Asia. Their mixed economies and "tax first" mentality is what keeps them barely above water.



And here you lose me totally. You will never see me push for resource allocation that is deliberately inefficient.

1. Those short teams expenditure build roads, railways, which can also create jobs, business opportunities, and competition power to USA. For saving banks, car factories, most of the cost can get back. Market is the main power, the market failure, or the market cannot satisfy people want is in short term.

2. If they use those money invest in local market, factories, or spend them in USA, it can help economies. However, this will not excise as the benefit for them is not the largest.This is my main point.

3. I assume most people are rational people. They will allocate resources that have greatest benefit for them
 

samuel3578

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Conversely, would that mean Deomcrats always suggest taxing more and spending more will help the economic recovery?


Why not?



Also if you have 5 dollars more in your pocket, you may or may not spend it. If you don't have 5 dollars in your pocket you will NOT spend it.


Apple has apx 25K workers "over seas". They have about 25K workers in the US. "Designed in California, Made in China". Who's going to buy the 900 dollar made in USA Ipod? If there were not iphones, ipads, ipods, would Apple have 25K employees in the US?

The benefits of the US economy are felt due to advancements made "over seas". Imagine a world where there was no investment in other countries. How much would you pay for a gallon of gasoline, or any other product which was manufactured in the US. The reason you can go to walmart and save money is because of these over seas investments.


If I want my company to GROW, it takes increased capital. If my company does not hire more people, then I need to have more technology which means buying things from other people who may hire more people. I ship more, I need more boxes which are produced by people... If you look at invididual companies which do not hire more people, if they are going to grow, it requires more money to be put into the system. It requires more orders. It requires YOU to have more money to buy MY products. I may or may not hire the individual, but the increased commerce will lead to more jobs as somewhere along the transaction lines there will be shortages which need to be filled. The more people working, the more people spending, the more tax revenue is collected via both sales tax and income tax.



Lets agree on 2 things. First, a tax of 0% would not produce income for the government because there would be no income. Second, a tax of 100% would not produce income for the government because there would be no incentive to have a business or go to work because no one works for free.

On the one side as you increase taxes, the government will increase revenue, and on the other side as the government decreases taxes it will increase revenue. If you can see how the that works then you can understand on why finding the optimal balance is important for sustainability.

Next, if you expand on what you just learned above. An economy with 100% taxes will have very little commerce, and an economy with 0% taxes would have the most commerce possible. As taxes increase, commerce transactions are slowed. In times of economic hardships, it is important to reduce taxes to assist in stimulating commerce. In the good times it is important to increase taxes to recoup the expenses from the previous downturn in the cycle.

As for the second part of the quote, it is important for the government to have a long term balanced budget plan, and not be concentrated on what each individual year is. There will be good years and bad years. Long term.


The greek problem exists because one, they did not have a long term balanced budget plan. Two they are not able to print their own money. If there was a Greek currency, then there would be no problem with Greece paying it's debt, but they must rely on other countries in the EU to provide the increased money supply.



1. I think spending can help economy, but I against add tax. Obama seldom add tax.
2. What we aim is low down economic unemployment. There are some extra coast to achieve this that the market is not prefer.
3. You are correct, no money, how to tax? The government is try to give opportunity to people earn money. Use the money to build infrastructure can create opportunities.
4. I mainly forces on that stock, flat investment. Sorry for that. And please do not be too extreme.
5. The situation now is they do not have enough business. No business, no profit, how to tax? Cut tax cannot help.
6. Do not have income, do not need to tax, this is the main problem.
7. USA is having a long term unbalance budget, USA can print money, but do you think we can print money with no limit.
 

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The main reason for business expansion is not capital avalability, it is a demonstrated consumer demand for products. Right now businesses are holding onto an extra $1 trillion (or at least that is what is being reported on the news), but they are not expanding. That alone disproves the theory that our economy is driven by capital.

Until we have a higher consumer confidence level, it is unlikely that we will have an increase in the demand for consumer products, and thus unlikely that anything such as additional capital will improve our economy. Tax cuts could be used to increase consumer confidence, but only to the extent that the tax cuts are significant and targeted for the consumer. Tax cuts for corporations, although I am totally for it for other reasons, will not significantly improve consumer spending levels as it does not directly effect most consumers. Tax cuts on the wealthy, such as the highest tax bracket or capital gains or inheritance tax will also do little to increase spending - the rich already can afford whatever they want, cutting taxes on the rich does not encourage the consumer class to spend.

However, tax cuts on the middle class will directly put more money into their pocket, which they will undoubtably spend, because that is what the middle class does with money. Since the rich already pay the majority of our income taxes, tax cuts on the middle class will reduce our government revenue by very little, but an extra $100 a month in the hands of a a middle class consumer would be mighty stimulative.
 

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Can't we just wait until overextended consumers trim their spending and increase their savings to the point where they are comfortable spending again? I mean, isn't that how a business should pursue confidence, as well as the individual?
 

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Can't we just wait until overextended consumers trim their spending and increase their savings to the point where they are comfortable spending again? I mean, isn't that how a business should pursue confidence, as well as the individual?

No, savings is bad m'kay.
 

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Can't we just wait until overextended consumers trim their spending and increase their savings to the point where they are comfortable spending again? I mean, isn't that how a business should pursue confidence, as well as the individual?

Sure, that should work - as long as consumers don't "trim their spending" right out of a job (which is largely what has happened during the past 3 years). If they loose their jobs because they aint spending, then how the heck are they ever gonna save? And if we ain't employed and aint paying income tax, then how is our gov gonna fund itself?

Yes, eventually, even if the government did absolutely nothing, the situation would correct itself, but it could take a decade or more. Do we want to have to deal with a "lost decade"?
 

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Sure, that should work - as long as consumers don't "trim their spending" right out of a job (which is largely what has happened during the past 3 years). If they loose their jobs because they aint spending, then how the heck are they ever gonna save? And if we ain't employed and aint paying income tax, then how is our gov gonna fund itself?

Yes, eventually, even if the government did absolutely nothing, the situation would correct itself, but it could take a decade or more. Do we want to have to deal with a "lost decade"?

A net debtor nation caught in a "productivity trap" would be a most damaging development. Would you hire an engineer, nurse, programer, etc... who has been out of the industry for a few years?
 

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A net debtor nation caught in a "productivity trap" would be a most damaging development. Would you hire an engineer, nurse, programer, etc... who has been out of the industry for a few years?

Good point.
 

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Yes, eventually, even if the government did absolutely nothing, the situation would correct itself, but it could take a decade or more. Do we want to have to deal with a "lost decade"?

What are you basing that estimate on?
 

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A net debtor nation caught in a "productivity trap" would be a most damaging development. Would you hire an engineer, nurse, programer, etc... who has been out of the industry for a few years?

If they're still good at what they do and ask for reasonable wages, then they would be employable.
 

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What are you basing that estimate on?

Gut feeling? Next month will start our 4th year of bad times, and it looks like we still have many more to go.

But also, a lot of people have ruined their credit. It takes 7+ years for reposessions, late payments, and defaults to be removed from credit reports. It can take 10 years for bankruptcies to be removed. Seems to be that it could be a long time before many of the families that have been hardest hit to recover. Until they regain their ability to borrow, and until they have saved up a lot of cash and paid down debt, it's unlikely that they will be making a lot of major purchases.

I really don't think that government action has harmed our economy so far, with the exception of adding to the debt, but I don't think it has helped much either. Essentially, if it had done nothing, no TARP, no Spendulous, no bailouts, we would most likely be right where we are now (economically), only with a little less gov debt.

I noticed a thread where people were saying that the great depression only lasted 4 years and then we had 8 more years where there was just a lack of recovery. I'm think that that's about where we are at now, a year or so into the "lack of recovery" years, although personally, my business sales are still falling.
 
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But what of the recessions before the Great Depression? None of those lasted as long as what we're talking about now or the Great Depression.
 

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But what of the recessions before the Great Depression? None of those lasted as long as what we're talking about now or the Great Depression.

I know that you are "up" on economic history, enlighten me (again) on the lenths of recessions prior to the Great Recession. You may have a very good point.

The one big thing though is that our economy is much more complicated now. I don't think that the average Joe back then relied so much on borrowed money, nor was their a credit bureo to screw up ones ability to borrow for 7+ years.
 

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Here is the NBER record of the business cycle dating back to 1854:

Source: National Bureau of Economic Research

In the period 1854 - 1919, there were 16 cycles, which averaged 48 months from trough to the previous trough ('trough-to-trough') and 49 months, to the peak from the previous peak ('peak-to-peak').
 
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Here is the NBER record of the business cycle dating back to 1854:

Source: National Bureau of Economic Research

In the period 1854 - 1919, there were 16 cycles, which averaged 48 months from trough to the previous trough ('trough-to-trough') and 49 months, to the peak from the previous peak ('peak-to-peak').

Thanks for the link. From peak to trough they averaged 16 mths. I noticed that from 1873-1879 there was a 65 mth contraction, then less than two years later their was another 38 month contraction after a fairly short recovery. Thats about 9 years of recession over a span of less than 12 years. So apparently it would not be out of the question to have a 9-12 year recession, at least if you include the months where there was little significant recovery. It is also interesting to note that recessions have become shorter lived on average, with longer periods of growth between them since inheritance tax and income tax were established, and again after WW2.
 

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What are you basing that estimate on?

imagination.

in reality, bereft of subsidies which encourage them to remain unemployed, or a large-scale government distortion of the market; these people very rapidly find employement again. just not always at their same jobs or income levels.

imagep said:
Next month will start our 4th year of bad times, and it looks like we still have many more to go.

yes, that is largely because of government intervention; both before and after the crash.


Crises Economics:

...Anyone familiar with government projects even at the municipal level knows that the process is usually prolonged and onerous. Even if the design phase is managed well, the project is built efficiently, and the end product proves to be of good use to the community — all big "ifs" — the time involved in debating project proposals, securing approval from citizens and local boards, planning the design, hiring contractors, and completing the construction often stretches to years. Cram the process into a dramatically shortened time frame, and the likelihood that the project will be an example of "wise" government spending diminishes significantly. Expand the scope of the government spending from town planning to national fiscal policy, and the likelihood shrinks even further.

This is not just a matter of government waste, but also a question of whether money spent under such circumstances actually helps the economy grow in a way that best enhances citizens' well-being. Whenever public money is involved, it is important to ask whether the spending will produce something society needs, or wants, to improve the general economic climate. Money spent on a new road that allows farmers to get their products to market faster and in better condition, for instance, creates more value than money spent building a "bridge to nowhere," even if both projects create the same number of construction jobs.

To look at it another way: If a person pays his neighbor $100 to dig a hole in his backyard and then fill it up again, and the neighbor hires him to do the same, government statisticians will report that the economy has created two jobs and that the gross domestic product has risen by $200. But it is unlikely that, having wasted all that time digging and filling, either person is better off — economically or otherwise. Each person's net financial gain is zero, and all anyone has to show for the effort is a patch of fresh dirt in the backyard, which is unlikely to improve anyone's standard of living.

Private individuals don't usually spend their money on things they don't want or need. So when money is kept in the hands of citizens, and transactions take place in the private sector, there is less cause to worry about inefficient spending. The same cannot always be said of government. This means that government spending designed to stimulate the economy must first be subjected to serious cost-benefit analysis, which is hard to do in a big rush. Not all government spending is created equal — and rushed spending is, in many important ways, likely to be less efficient and less useful than spending that is carefully planned...

Perhaps the most compelling research on this subject is a very recent study by my colleagues Alberto Alesina and Silvia Ardagna at Harvard. They used data from the Organization for Economic Cooperation and Development to identify every major fiscal stimulus adopted by the 30 OECD countries between 1970 and 2007. Alesina and Ardagna then separated those plans that were in fact followed by robust economic growth from those that were not, and compared their characteristics. They found that the stimulus packages that appeared to be successful had cut business and income taxes, while those that evidently did not succeed had increased government spending and transfer payments...

Attractive as such ideas may seem at first, targeted tax cuts and incentives are in fact very difficult to implement properly. If tax cuts indeed make for better fiscal stimulus than direct government spending, they should be broad-based cuts or incentives, rather than narrowly tailored interventions.

Here again, the fiscal-policy decisions of the past year and a half have not been implausible or inexplicable — but they have also not been empirically shown to work. The data point to other approaches.
 

Missed AB

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It is also interesting to note that recessions have become shorter lived on average, with longer periods of growth between them since inheritance tax and income tax were established, and again after WW2.

Interesting that you would connect those 2 dots. Out of all the possible connections you link taxes... Consider this Germany has a tax rate at 42% > 52K EU, there is also a VAT of 7 to 19%, . This year, Germany has reached the lowest level of unemployment in about 20 years, 7.5%. We in the US are up in arms with unemployment at 9%. Germany has AVERAGED 8.5% unemployment over the last 2 decades. If higher taxes are the key to prosperiety, howcome Germany is only equal to us in employment, AND the worker productivity is much lower than the US worker. In other words, the US workers in Germany would further increase German unemployment.

Just wondering, howcome there is such a disparity if you think taxes fix everything?
 

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Interesting that you would connect those 2 dots. Out of all the possible connections you link taxes... Consider this Germany has a tax rate at 42% > 52K EU, there is also a VAT of 7 to 19%, . This year, Germany has reached the lowest level of unemployment in about 20 years, 7.5%. We in the US are up in arms with unemployment at 9%. Germany has AVERAGED 8.5% unemployment over the last 2 decades. If higher taxes are the key to prosperiety, howcome Germany is only equal to us in employment, AND the worker productivity is much lower than the US worker. In other words, the US workers in Germany would further increase German unemployment.

Just wondering, howcome there is such a disparity if you think taxes fix everything?

I don't by any means thing that taxes fix everything. Of course higher taxes in general negatively effect economic growth, and lower taxes in general positively But I do subscribe to the theory that a PROGRESSIVE tax systems keeps money circulating, and thus tends to lead to a healthier economy.

I am ignorant about the German economy, so I am certainly not qualified to analyse how the German tax system has affected the German economy or if there is any correlation between taxes in Germany or taxes in the US, but based on the info that you just presented, it appears to me that the VAT may certainly be something that is holding back the German economy.
 
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