Map of life expectancy at birth from Global Education Project.

Thursday, August 02, 2012

Zombie lies eat my brain

Andrew Sullivan, who is an inexplicable stew of wisdom and folly, in discussing tax policy, writes the following: ". . . even though lower tax rates are obviously better than higher ones for growth, if you can afford them."

I responded as follows:

This is simply false -- as the history you discuss in the very same post proves. [I.e. poor economic performance under GW Bush]. It is what is called a truism -- conservatives have repeated it so many times, and the corporate media have swallowed the meme so wholly, that most people have come to believe it.

The truth is that there is no correlation between growth rates in developed countries and the marginal tax rate. As you know perfectly well, federal income tax rates in the U.S. were higher under Dwight Eisenhower than they are today, and indeed higher than they were under Ronald Reagan. Growth in the U.S. was much higher under Clinton than it was after the Bush tax cuts. It is not a question of whether one can "afford" the taxes - it's a question of what you do with them. When government collects taxes, the wealth represented by the funds is not destroyed -- government spends the money. It is recycled. If it is spent wisely, on public investments that support long term prosperity, then we are better off than we would be had the taxes not been collected.

Conversely, when people are not taxed, they do not necessarily spend or invest the money in ways which promote long term growth. They may invest it abroad, invest it unwisely or even counterproductively, squander it on drugs, you name it. Whether taxes are "affordable" or not is purely a question of judgment - do you want to pay for what the government buys with them, or not? If you don't want to educate children, maintain highways, enforce the law, invest in the creation of knowledge and technology, or take care of the sick and old, then you don't think we can afford the taxes needed to do those things. If you do wish to do them, then you think we can afford it.

It is simply not the case that government is necessarily a worse steward of wealth than Sheldon Adelson. Once you notice that, the entire argument about lower taxes and economic growth dissolves like a snowflake in May.

1 comment:

Anthony said...

Andrew is an incredible person, born 10 August 1963 was a British author, editor, political commentator and blogger. He describes himself as a political conservative. He has focused on American political life.

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