Supply Side Makes a comeback March 27, 2008
Posted by baxtersbrother2 in Tax Policy., Uncategorized.Tags: Tax Policy.
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This was posted in The New York Times yesterday that was great. It is linked here. Goes into great lengths that explains that supply side economics can work. It has been demonized at a university level and history does repeat itself. I was at a function earlier last week and we were debating policy over beer ( it is always good to debate something when you are half lit). Anyway, I can predict the future right here. Even though I will disagree with it with passion, I believe that the Bush Tax Cuts will be repealed. I believe that the current political dialogue and the deficit will be about $400 billion. I thought that I upset those who are most passionate, but I can be a realist and I am an accountant at heart. I have read tax code in earnest. Nothing remains the same in terms of policy. Rates are changed, calculations are “enhanced” or simplified. If you ever want to relieve yourself of insomnia, get the latest CCH’s Guide to US Tax policy. Guaranteed to confuse and just anger. The policy is written like this, there is a simple rule (under the disguise of If you have this, Do this). Then there are hundreds of exceptions and phaseouts to the rule. It is so stupid. Things like, “this does not apply to certain industries” to things like, “if you live in Alaska, and grow corn organically, you get a tax credit.” Remember, these are written by politicians. They got things to do like fundraise, go to lunch, and grandstand. So, lets make it as difficult as possible.. Sad.
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I liked the following chunk of the article, which summarizes the arguments nicely:
“The supply-side argument these days really applies to upper-income people,” said Robert M. Solow, a Nobel laureate in economics who served in the Kennedy administration. “They are portrayed as the golden geese, and you don’t want to discourage them from laying their eggs.”
By contrast, Mr. Solow says, “the Democrats are convinced they’ll lay their eggs anyway, without tax cuts as an incentive.”
Would you produce when more than a third of your overall production is taken away by the government?