Idea that tax cuts would pay for themselves has caused lasting damage

[papau]

http://www.guardian.co.uk/economicdispatch/story/0,12498,1234166,00.html

Reagan's taxing legacy

The Reaganomics doctrine that tax cuts would pay for themselves has caused lasting damage, says William Keegan

Tuesday June 8, 2004

<snip>There was a fundamental flaw at the heart of Reagonomics, namely the idea - epitomised by the famous Laffer Curve - that tax cuts would pay for themselves via greater incentives.

The truth was that the supply side doctrine was a crude and intellectually shabby attempt to justify tax cuts for the rich. For those with incomes above $250,000 (£135,879) a year, taxes as a percentage of income came down from 48.6% to 38.9% between 1980 and 1984.

The way in which certain tax exemptions were removed actually led to a rise in the proportion of income paid in tax by the lowest income groups. In most of the eulogies for Reagan this week, all those cuts in government expenditure on food stamps, school lunches, welfare Medicaid and subsidised housing have been forgotten.

The great economist, John Kenneth Galbraith, put it in a nutshell when he said there was something strange about a doctrine holding that the rich would work harder if they had more money and the poor would if they had less. <snip>


· William Keegan is the Observer's senior economics commentator

[mopinko]

1. can't believe

this is still news.

[papau]

2. Not LBN - but it is to the networks/media this week and their GOP masters

:-)