Do Tax Cuts Lead to Economic Growth?

[Politico]

Correlation does not necessarily imply causality, and obviously a national economy is a complex system with thousands of known and unknown endogenous and exogenous variables. With that said, anybody who knows anything about human behavior can tell you that strong incentives to work more and harder (e.g., tax cuts in Reagan's America or threats of death/disappearance in the Soviet Union/Cuba) should, for the average person, lead to greater production ceteris paribus.

There is also the philosophical argument that a worker should keep most of the fruits of their labor, and be free to choose how to spend those resources as they see fit in accordance with their own individual tastes and preferences. An environment that embraces this viewpoint will have evident market diversity; a more tax-and-spend heavy approach will be more characterized by government conformity. Lastly, if one holds the view that most or all government agencies are inherently inefficient (nullifying the second fundamental theorem of welfare economics) then one should be in favor of tax cuts at any time for any reason, although perhaps this is a bit blunt.

[Politico]

I don't know if you could make the argument that tax cuts hurt economic growth, but maybe that tax rates don't effect the economy as much as one might expect?

Diminishing returns, really. I mean, we cut taxes a lot in the early 1980s and it had positive behavioral ramifications, and obviously there is not room to cut taxes to such a large degree nowadays. Tax reform, as proposed by Romney, needs to be the new approach. A lot of resources are basically wasted satiating the demanded rent-seeking levels of lawyers/accountants with regards to our insanely bureaucratic tax code. Listening to the same people we listened to in 2009, especially under the current administration, will only lead to the same results we have today, if not worse. The current administration is captured by lawyers and public unions, and that's what a lot of economists are missing because they're unaware of the Washington Way.

Too many people have ignored price signals for too long in the past 10-20 years, and now they wonder why they're in debt up to their eyeballs? We need more research on how many people in the west no longer pay attention to prices (largely because of a culture of "easy" credit, of course, and mind you I am NOT of the Austrian School but I think there is good reason to look into this more). None of this is rocket science, really.

I do have sincere sympathy for those who are victims of the entire mess, but "The Man" does not exist. If he did, Obama never would have came anywhere near the White House.

[Politico]

So basically, we're just going to ignore empirical evidence and repeat our religion of Mammon. Makes sense.

Way to inject religious rhetoric into a scientific discussion, buddy. If you really believe correlation between economic growth and tax cuts means a damn thing on its own, you've hopefully never taken a class in Econometrics (or more than second year Macroeconomics for that matter). A national economy is a complex system of the highest magnitude with thousands of known and unknown variables, especially after you open up to world trade. Even the most brilliant physicist in the world could not possibly explain it fully even if he devoted the rest of his life to it. Paul Krugman, an economist of the highest caliber in his top area of specialty (i.e., international trade), is a hack for pretending to be that guy and fooling a lot of people in the process. He's the 21st Century Wizard of Oz (don't pay attention to that man behind the curtain!)

[Politico]

I hope that poster is not me.

It's not.

Hardy-har.

[Politico]

Not to as much [little] growth as as government spending. The multiplier is smaller [for government spending] because a [large] portion of [it is wasted on bureaucracy, transfers, rent-seekers, special interest groups and so forth.] [T]he extra money people have as a result of the tax cuts will be saved and not spent. [is spent and/or invested in labor/capital, both of which contribute to economic growth. It is not stuffed under mattresses nor is it wasted on useless bureaucrats and perverse boondoggles like "Obama Phones."]

Fixed.