1/5
This WSJ article makes an important point: tax cuts promote growth mainly to the extent that they promote domestic business investment. This means that whether or not tax cuts are good for growth depends on underlying conditions.
https://www.wsj.com/economy/why-some-tax-cuts-can-be-better-than-others-507717cb?st=pPwAda
This WSJ article makes an important point: tax cuts promote growth mainly to the extent that they promote domestic business investment. This means that whether or not tax cuts are good for growth depends on underlying conditions.
https://www.wsj.com/economy/why-some-tax-cuts-can-be-better-than-others-507717cb?st=pPwAda
Comments
In an economy in which businesses are eager to invest, but are constrained by scarce savings and expensive capital, tax cuts on businesses and the wealthy would most likely boost investment because they would boost savings and redirect real resources into business investment.
But if businesses are reluctant to invest because of weak domestic demand, or because cheap exports from other economies are unbalanced by imports, it is not at all obvious how tax cuts for businesses and the wealthy do much more than...
boost inequality, which – because the rich spend a lower share of their income than ordinary households – may only further restrain domestic demand and, with it, domestic investment.
https://carnegieendowment.org/china-financial-markets/2014/03/economic-consequences-of-income-inequality?lang=en
The idea that tax cuts are always good or always bad is ideological nonsense. They promote investment and growth under certain conditions, but undermine it under other conditions. We should be very clear about what these different conditions might be.