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Thursday, September 18, 2014

Tax Cuts Can Do More Harm Than Good

More on the new work from William Gale and Andrew Samwick (I've posted on this before, but given the strength of beliefs about tax cuts, it seems worthwhile to highlight it again):

Tax Cuts Can Do More Harm Than Good: Tax cuts are the one guaranteed path to prosperity. Or so politicians have told Americans for so long that the claim has become a secular dogma.
But tax cuts can do more harm than good, a new report shows. It draws on decades of empirical evidence analyzed with standard economic principles used in business, academia and government.
What ultimately matters is the way a tax cut is structured and how it affects behavior. A well-designed tax cut can help increase future prosperity, but a poorly structured one can result in a meaner future with fewer jobs, less compensation and higher costs to society.
William G. Gale of the Brookings Institution, a nonprofit Washington policy research house, and Andrew Samwick, a Dartmouth College professor, last week issued the report, “Effects of Income Tax Changes on Economic Growth.”
Gale said he expects emailed brickbats from those who have incorporated the tax cut dogma into their views without really understanding the issue. ...

    Posted by on Thursday, September 18, 2014 at 09:39 AM in Economics, Taxes | Permalink  Comments (8)


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