Tuesday, November 27, 2007

A very typical post

Megan has roughly 9 post templates, 10 if you count blegs and random questions. There's the rare and incoherent attempt to display that english degree, the five words introducing someone else's work post, health care posts, school voucher posts, posts about race, posts about the DC mafia lunch table clique, such as Gavin covered so very, very well, posts about herself, probably the leader in sheer total number, posts about various economic matters, and, finally and, to me, most annoyingly, posts where she begins or ends with a seemingly reasonable and defensible position that's directly contradicted within about 20 words before or after, if even that far.
Case in point:
the Republicans should stop spouting nonsense rhetoric about their plans to raise tax revenue by cutting tax rates. However, it's not clear to me that this is what Fred Thompson is doing
It's not brain surgery, but at least Megan is honest enough to admit basic empirical facts. The sad thing is the sentence immediately following isn't the truly mind numbing part of the post. We get a long chunk of a Post article, then the following:
Tax simplification and cutting the corporate income tax would spur growth, and tax simplification might, by itself, bring in a significant amount of money, so I'm not sure it's correct to characterize Fred Thompson as dishing out the supply side Kool-Aid.
If you tax corporations less, it will spur growth and overall revenues will improve, but if you say lowering taxes will improve revenues you're crazy.


spencer said...

Lowering taxes on businesses *can* work to spur the economy, but only in particular situations.

An example of where such a policy could work would be one in which demand for a product or service (or even demand for most products and services) is high or increasing, but because of high taxes, businesses lack the cash on hand to expand quickly and meet that demand. If taxes on businesses fall, expansion can occur, and then (hopefully) the taxes brought in from the increased sales will make up for the lower tax rate.

An example of where such a policy would probably *not* work is one in which demand for goods and services is flagging across the board. If a hypothetical business is only operating at, say 65% of capacity due to a weak economy, the business owner is unlikely to apply any tax break he or she receives to hiring more workers or expanding production (and thus helping to grow the economy). Why would he? The demand just ain't there. Adding production capacity would mean that his business will now be running at 60% capacity instead of 65%. He or she would be much more likely to simply pocket the tax cut, or perhaps invest it overseas.

Of course, my background (and thus outlook) is much more microeconomics-oriented than Big Picture Macroeconomics-oriented, so YMMV.

brad said...

Ah, but she said "corporate taxes", not business taxes. The clear implication, to me at least, is that she doesn't mean make it easier for smaller businesses to scale up, but for large ones to be given further breaks.

spencer said...

Aha, you are correct. I read too quickly. Thanks.

But everything I wrote is still true.

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