Baseline Scenario on what is wrong with cutting taxes

Baseline Scenario has a short enlightening post concerning the lack of positive results which cutting taxes on the rich would have.

Two quotes will suffice to prompt the reader to read the entire post:

“In fact, try persuading any responsible policy analyst anywhere in the world outside the United States that cutting taxes in the United States from current levels will boost growth so much that the cut will pay for itself” and end up reducing or at least controlling the fiscal deficit (the proposition of the Laffer Curve). You will be met great skepticism.

If the I.M.F. could speak truth to authority in the United States, it would tell you this most forcefully.”


“Cutting taxes for the very rich is an ineffective way to stimulate the economy in the short term (for a detailed discussion, see this post by my colleague James Kwak). On this there is widespread agreement, including from the pages of The Wall Street Journal, where Robert Frank, a careful student of the rich and famous (and editor of The Journal’s Wealth Report and author of “Richistan”), said: “When I ask wealthy business owners and entrepreneurs why they’re not hiring, they rarely mention taxes. They say consumer demand. And jobs.””

Good quote from the aforementioned post by Kwak:

“(Note to Barack: If you want to win a negotiation, you have to be willing to walk away. Take my daughter. If I threaten her with a three-minute timeout, she says, “I want a timeout for eight hours!” If I threaten to take away an episode of Dinosaur Train, she says, “I don’t want to watch Dinosaur Train ever again!” You have two daughters, right?)”

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