President Bush's former Council of Economic Advisers chair Greg Mankiw restates what so many Bush economists have said -- contrary to the claims of the President and most of the GOP presidential contenders, tax cuts don't raise revenue:
Republican candidates are fond of saying we should cut tax rates because doing so would incentivize more rapid economic growth (true) and raise tax revenue (wishful thinking).
Once again, it is contextual; theoretically, if well timed tax cuts prevent the onset of a chain of events that result in a self-reinforcing spiral into a depression, they could very viably result in higher tax revenues than would have resulted had a depression occured. Brendan ... the answer remains it depends no matter who you site. And presented with this scenario, Mankiw would agree.
E.g., if Hoover had cut taxes to serve to prevent the 1930s depression, it would certainly have resulted in higher revenue.
TOH
Posted by: The Objective Historian | February 10, 2008 at 06:24 AM