Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Saturday, December 17, 2005

Daniel Gross finds National Review beyond belief:

Daniel Gross: November 20, 2005 - November 26, 2005 Archives : KOOL-AID WATCH In a recent National Review column, John Tamny rips into liberals and Republican moderates for their failure to drink adequate amounts of the supply-side Kool-Aid.

Despite clear evidence that the marginal rate cuts of the 1920s, 1960s, and 1980s (not to mention the 2003 tax cuts) led to higher revenues, Sen. George Voinovich (R., Ohio) recently said that "contrary to what some of my colleagues believe, tax cuts do not pay for themselves."

Imagine the audacity to state plainly the obvious. Hmm. Lets see what other weak-kneed, economically illiterate, growth-hating yutz has recently put forth the astonishing heresy that tax cuts don't pay for themselves. Oh, how about N. Gregory Mankiw.

Money quote: "the dynamic effect of a a cut in capital income taxes on government revenue is only 50 percent of the static effect. That is, one half of a capital tax cut pays for itself."

Note that even this applies only (a) on taxes on capital income (the offset for taxes on labor income are calculated to be much smaller) and (b) only in the long run of more than two generations from now--in the short run of the net quarter century the offset is much smaller).

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