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.: October 2007 --> On the popularity of the supply-side orthodoxy

On the popularity of the supply-side orthodoxy

» New Yorker: James Surowiecki why the orthodoxy of supply-side economics remains so popular in the Republican party, despite clear evidence that tax cuts—surprise—shrink government revenue.

Saying today that tax cuts will increase tax revenues is not like saying that bombing Iran constitutes a sensible foreign policy, or that education vouchers will wreck the public schools. It's more like saying that the best way to treat sick people is to bleed them to let out the evil spirits.
[But] the absurd idea that tax cuts pay for themselves is based on an idea that is not at all absurd, which is that tax rates can have an impact on people's behavior.

I've never bought the idea that wealthy people will just refuse to make more money if they are taxed too heavily. When's the last time you saw a movie star—or a hedge fund manager—refuse cash so that they can be taxed at a lower rate? That's senseless.

And let's be clear that the very rich are making much of their money from investments, not from work. People may change their investment strategies to maximize profits, but that's not the same as choosing not to create wealth (ie - "value for society") because they won't be able to keep enough of it.

 [ 10.23.07 ]



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