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aceventura3 · 10-22-2007, 10:22 AM

I am curious. Many do not believe Supply Side economics works. As I have read posts on the subject, in particular about Bush's tax cuts, it is my understanding that those who don't believe Supply Side theories don't believe that tax cuts actually benefit the economy and specifically working class and poor people.

To be clear, in my view tax policy can have three affects on the general economy. One, it stimulates the economy. Two, it is neutral. And three, it restricts economic growth. Generally in a relative high marginal tax rate environment, cutting tax rates will stimulate the economy in my view, hence the Supply Side affect. I think it is virtually impossible to have neutral tax policy. I think in rare instances raising tax rates can stimulate an economy, however this would be true in a developing economy. For example, raising tax rates in an unregulated economy would be a positive for that economy or raising tax rates to build an interstate road system would be good for the economy. However, I think in most cases raising tax rates will put a damper on economic growth. Therefore, in all most all other circumstances with relatively high marginal tax rates, lowering those tax rates will stimulate economic growth. And I believe economic growth is good for everyone participating in the economy.

So my question to those who do not believe Supply Side works, relative to how tax policy affects the economy what do you believe?

Do you think tax policy is neutral? Do you believe raising taxes stimulates the economy, and if so under what circumstances? Why don't you believe all participants in a growing economy benefits? At what point do you think tax rates would be too high?

10-22-2007, 10:22 AM	#1 (permalink)
aceventura3 Junkie Location: Ventura County	If Not Supply Side then What? I am curious. Many do not believe Supply Side economics works. As I have read posts on the subject, in particular about Bush's tax cuts, it is my understanding that those who don't believe Supply Side theories don't believe that tax cuts actually benefit the economy and specifically working class and poor people. To be clear, in my view tax policy can have three affects on the general economy. One, it stimulates the economy. Two, it is neutral. And three, it restricts economic growth. Generally in a relative high marginal tax rate environment, cutting tax rates will stimulate the economy in my view, hence the Supply Side affect. I think it is virtually impossible to have neutral tax policy. I think in rare instances raising tax rates can stimulate an economy, however this would be true in a developing economy. For example, raising tax rates in an unregulated economy would be a positive for that economy or raising tax rates to build an interstate road system would be good for the economy. However, I think in most cases raising tax rates will put a damper on economic growth. Therefore, in all most all other circumstances with relatively high marginal tax rates, lowering those tax rates will stimulate economic growth. And I believe economic growth is good for everyone participating in the economy. So my question to those who do not believe Supply Side works, relative to how tax policy affects the economy what do you believe? Do you think tax policy is neutral? Do you believe raising taxes stimulates the economy, and if so under what circumstances? Why don't you believe all participants in a growing economy benefits? At what point do you think tax rates would be too high? __________________ "Democracy is two wolves and a sheep voting on lunch." "It is useless for the sheep to pass resolutions on vegetarianism while the wolf is of a different opinion." "If you live among wolves you have to act like one." "A lady screams at the mouse but smiles at the wolf. A gentleman is a wolf who sends flowers."