Five myths that must die

 Posted by at 21:24  economy, Politics
Oct 172011

It should come as a surprise to nobody who has visited here before… I have a subscription to Mother Jones. Yes, the print magazine. How old fashioned is that? Still, though, I do believe in the work they are doing and wanted to support it in my own small way.

In the issue that landed in our mailbox just the other day, Kevin Drum (yes, that Kevin Drum) has an excellent article that I highly recommend. You can read it online. It’s entitled “Rich People Create Jobs! (And five other myths that must die for our economy to live.)”.

Here’s a taste from Myth #3: Lower taxes are the best way to grow the economy…

There’s no greater orthodoxy in the Republican Party than unconditional fealty to tax cuts. In a recent GOP debate, when the candidates were asked whether they’d walk away from a deficit deal that included just $1 in tax increases for every $10 in spending cuts, every single hand shot up.

Taxes have been the third rail of American politics ever since the California tax revolt of 1978. Even Democrats are nervous about touching them: President Obama has famously called for letting some of the Bush tax cuts expire, but he’s always careful to make it clear that he wouldn’t change rates for anyone earning less than $250,000 per year. In other words, he’d repeal less than a quarter of the Bush tax cuts.

This fear is easy to understand. No one likes paying higher taxes. But do lower taxes actually spur economic growth? Bruce Bartlett, an economist in the Reagan administration, has compared tax rates in various rich countries in 1979 to each country’s growth rate since then. His conclusion? There’s virtually no correlation.

Recent US history backs this up too. Bill Clinton raised tax rates in 1993, and Republicans insisted it would cripple the economy. Instead, the economy boomed. In 2001 and 2003, George W. Bush lowered taxes and Republicans insisted the economy would flourish. Instead, we got the weakest expansion of the past century. Republicans are simply wrong about taxes: Within reason, high tax rates don’t hinder growth, and low tax rates don’t stimulate it.

I hope you’ll click through and read the entire article. Even better (and I get absolutely no compensation of any sort for saying this), I hope you’ll join me in subscribing to Mother Jones.