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Wednesday, January 03, 2007

Vox Baby's New Year's Plea

Andrew Samwick asks someone, anyone, in the administration to stop George Bush from claiming tax cuts increase revenue and help with the deficit, because it's not true:

A New Year's Plea, by Andrew Samwick: To anyone in the Administration who may read this blog, I have one small wish for the new year. Please stop your boss from writing or saying the following:

It is also a fact that our tax cuts have fueled robust economic growth and record revenues.

You are smart people. You know that the tax cuts have not fueled record revenues. You know what it takes to establish causality. You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one.

If I'm wrong, show me the evidence ... and tell me why the tax cuts were so small given their effects on revenues.

    Posted by on Wednesday, January 3, 2007 at 03:33 PM in Budget Deficit, Economics, Politics, Taxes | Permalink  TrackBack (0)  Comments (6)


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