Papers I need to read: Do tax cuts really help growth?

at 11:36 AM ET, 03/27/2012

There’s No There There: Low Tax Rates and Economic Growth.” Here’s the abstract:

Low tax rates can be seen as a desirable policy goal for a variety of reasons. Your views on justice and desert may require a system of taxation that allows people to keep as much as possible of what they earn. Or you may have strong opinions on property rights, self-property, self-reliance and the “undeserving poor.” In this paper, however, I will examine the merits of another and prima facie more convincing rationale, namely that low levels of taxation — especially low levels of taxation on the income or wealth of the so-called productive segments of society — are beneficial for economic growth. I criticize both the theoretical underpinnings of this view and its factual basis . . . It may even be the case that low tax rates have unwanted harmful consequences instead of the assumed beneficial ones.

Counterintuitive!

 
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