Understanding Anew Supply-Side Economics

[monk222]

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Since the 2006 elections, we've been seeing a lot shifts, some subtle and some not so subtle, to the left. Now we see some movement at the root concept of supply-side economics, which triumphed with the Reagan Administration:

Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances. No longer do its advocates in Congress and elsewhere confine themselves to cutting marginal tax rates — the tax on each additional dollar earned — as the original supply-siders did. Rather, they support even the most gimmicky, economically dubious tax cuts with the same intensity.

Now, there is still a legitimate debate about the size of government and how big or minimal it should be. But it will be carried on more honestly. The right has been having it both ways, saying that we increase government revenue by cutting taxes - you can have your cake and eat, too. The general rule of common sense is reclaiming some of that ground: when you cut taxes, you are usually cutting revenue, too. You cannot get something for nothing.

Maybe less government means a more robust and richer private economy and a wealthier society, but that is a different debate, a more fundamental one. Americans have yet to demonstrate they want a smaller government in fact, as we have other values of fairness that we are also concerned about. With the bills on the war still coming in, and with more calls for better health coverage, one imagines that taxes will be going up.


(Source: Bruce Bartlett for The New York Times)

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Comments

[antilapsarian.livejournal.com]

The hot topic here in IL is that the governor has proposed a plan that would essentially tax businesses to pay for every citizen in the state to be covered by health insurance.

Business owners cry foul, of course, claiming they'll pack up and move to Wisconsin or some such. Or, at the very least, it will be passed on to consumers. It's the same argument as happens when they try to raise the minimum wage.

I just took a survey for the DNC asking me my opinions on key topics and one question was whether or not I support a tax cut on working Americans. I noted that, more than tax issues, what concerns me is the way the federal government spends money. I have no problem with taxes as long as they are being used wisely. It is the "no taxation without representation" thing that gets us though, right? Taxes have to be going to meet public needs--mainly, benefit the constituents.

There are no local income taxes here in IL, just state tax so that the sales taxes are crazy. 9% or so compared to 5-6% in Ohio. But I think a simple flat tax punishes people on low-end goods in some ways. I'd be more supportive of a graduated, categorized flat tax which increases the percent depending on the item and how much it costs.

In other words, you should pay more tax on a new BMW than on a pair of pants. The pants maybe should have a 5% tax. The BMW, a 10% tax. Bottom line is that those who can most afford it should be the ones who pay more to the government and the little guy should get a break.

I think that has been the criticism of Bush is that while spending was out of control under his reign, he pushed through tax cuts that benefit the wealthy while things like higher education and middle income folks feel the squeeze of higher prices, etc..

My argument would be that I'm not for big or small government. I don't care about size, I care about use. Big or small government can be just as ineffective either way. The more important thing is that government is taking in revenue wisely and then spending it wisely.