Wednesday, September 1, 2010

More false reasoning about tax cuts

Another Leonhardt article. Seriously, they need to stop publishing this guy: Tax Cuts That Make a Difference. I posted in the comments section:

Does more, eh? Where's your data? This is the problem with journalists who know nothing about economics, they just make stuff up without support. Whatever sounds good to them is what they will advocate.

Spending money is only good for the short term. Saving and investing leads to more consumption later. Like always, we face trade-offs. Advocating policy that leads to artificial spending now might make things feel better, but what do you think happens when those policies are lifted?

You think the cash for clunkers program was effective? All it did was transfer money from tax payers to the auto industries. It was a bailout, plain and simple. Just like the housing tax credits, all it did was move buying decisions around and cause the tax payer to lose. If a firm cannot earn a profit because they have promised too many benefits and cannot compete on the global economy, they should be allowed to meet their demise.

Once again Leonhardt fails to understand the concept of a control case. The economy was already on a downward spiral handed over from Clinton. What does Leonhardt expect, the tax cut takes effect and suddenly all problems are cured? No clearly things would take some time and also, what would have happened without the tax cuts? Also, you cite the 2001 cuts, but not the 2003 cuts which were stronger because they phased the tax cuts in at a faster rate (instead of the rates dropping in 2006, they dropped in 2003) and growth exploded the following quarters.

Also, I like how you provide invalid references (sarcasm). Also, you fail to understand that employment lags. The economy can start to do better but unemployment can lag for years, just like in this recession. A better metric is the GDP growth rate, and you will find that GDP grew strongly after his tax cut.

Taxes matter more than you think. Assuming all tax rates go up here: If I make 100k a year and my taxes go up an extra 3,000, do you think I don't feel that? And since my take home pay would be nearly 50k, that would represent 6% of my income. If I make 250,000 that is an extra 7,500, and that is on top of an extra progressive rate, so the actual increase in the tax burden is several percentage points higher.

Liberals like you love to tax away other people's money to spend on your socialist pet projects. You agree that taxes matter, but then downplay its importance with the caveat that follows. If taxes aren't that big of a deal, then why does the government spend so much time manipulating consumer behavior with the tax code (think cigarrette taxes, green rebates, mortgage deductions, etc.)? The tax cuts went disproportionately to high-income tax households because they pay more of their income in taxes! Why do liberals consistently rant about how the wealthly benefited the most from tax cuts.? If I am earning 100k and my taxes go down three percent (for example), I get three thousand dollars back. If Bob makes 10k and his taxes go down three percent, he gets 300 back. Is it really unfair that I got a larger dollar amount? No, especiallly since I was paying a lot more in taxes than Bob was in the first place!


No comments: