Do Tax Cuts Lead to Economic Growth?

[Fmr President & Senator Polnut]

It 'can' but it depends on the circumstances... as I've written before, they have diminishing returns. Taxes can be too high and can impact on economic activity. But I find the view that taxes just need to keep going down... and there's some kind of ideological mind-block for them... there's no significant evidence that tax cuts inherently stimulate the economy. Basically, if you don't care about the direct causal connections of the tax cuts on the economy, then you're only in a ideological bog where taxes must always go down... "but what about..." "they must always go down!!!!"

Kennedy's tax cuts did lead to economic growth and Reagan's did too, although 'trickle-down' is largely a myth. But at the same time Clinton's tax increases did help the government balance the books, which did aid in business confidence. Bush's tax cuts were utter failures and left the US without the ability to respond to the GFC without massive financial consequences.

So, what I'm saying is there isn't a 'rule' some think tax cuts always boost economic growth others say taxes should be increased... and I think they're both wrong as a generalisation, but they can both be a correct avenue depending on the circumstances.

At the moment? The last thing the Government should be doing is reducing their revenues while trying to restore their economic position.