§7.1

a blog by josef johann

Wednesday, January 5, 2011

Keynesian Tax Cuts

Here's a neat chart from the Center for Budget and Policy Priorities:



Even if a Republican doesn't want to argue that tax cuts pay for themselves, they still have the option of arguing that tax cuts nevertheless stimulate economic activity. That's true, and it is, I think, something Republican politicians believe and explicitly argued in the debate over extending the Bush-era middle class tax cuts.

But if you are willing to incur deficits to stimulate the economy via tax cuts, that means you are willing to incur deficits to stimulate the economy. And you might as well incur deficits to stimulate the economy in the most effective way possible, right?

If not, we are talking tax cuts for the sake of tax cuts.