How do Tax Cuts hurt the economy?

Discussion in 'Economy' started by CrusaderFrank, Mar 5, 2010.

  1. CrusaderFrank
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    CrusaderFrank Diamond Member

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    I've seen this stupid "Tax cuts hurt the economy" nonsense posted by every Lib here and want someone to tell me how that's supposed to work.

    Do people not know that the US economy and the Federal government are 2 different things?
     
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  2. PLYMCO_PILGRIM
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    PLYMCO_PILGRIM Gold Member

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  3. Toro
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    Toro Diamond Member

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    Tax cuts don't usually hurt the economy, at least not that I know of. However, they don't always help the economy either, at least in the short-term.

    When people are busy saving money and not spending because they are afraid they are going to lose their jobs, tax cuts will have almost no effect because the extra money goes directly to repairing the balance sheets of individuals, which is pointless in a recession. All it does is transfer debt from the private sector to the public sector.

    Over the long-term, tax cuts are usually - but not always - beneficial for the economy. However, any tax cut that is not matched by a spending cut is no different than a spending increase without a rise in taxes. You get a near-term pop in the economy because of deficit financing.
     
  4. PLYMCO_PILGRIM
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    PLYMCO_PILGRIM Gold Member

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    Good Post Toro.


    This thread will get no traction, people dont like the truth when it conflicts with their ideology....especially when they are progressives like many liberals on this forum.
     
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  5. Oddball
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    Oddball BANNED Supporting Member

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    Repairing balance sheets puts businesses in better position to borrow. Businessmen wouldn't borrow without some kind of idea that they could repay and still profit, which in turn would tend to spur productive growth.

    Pointless?...I think not.
     
  6. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    It all depends upon the time horizon. We have sectors of the economy that are addicted to pork and people who are addicted to entitlements. Cutting them off (because tax cuts without spending cuts are not going to work), will result in a period of pain. The benefit is not in the "instant gratification" category. Over time, relatively quickly, if the private sector is confident that spending and taxes won't get rejacked up, it ill make investments leading to growth and jobs.
     
  7. uscitizen
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    uscitizen Senior Member

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    Umm what happens when the govt has less money coming in?
    Borrow more or reduce spending?
    Reducing spending directly relates to jobs and the economy.
    Where do you think all that money winds up that the government spends?
     
  8. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    Consumption, fraud, and waste - which have very poor multipliers for spurring economic activity when compared to private investment in real businesses.
     
  9. Oddball
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    Oddball BANNED Supporting Member

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    Where do you think Big Daddy Big Gubmint gets the money in the first place?

    [​IMG]
     
  10. uscitizen
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    uscitizen Senior Member

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    Well they had to buy something to waste didn't they?
    Or hire someone?

    I am not claiming it is efficient or anything, just that the govt spending is directly linked to the economy. a trillion or so spent in the USA has to have a wee bit of an effect I would think.

    even the trillion spent on Iraq has an economic impact in the USA. Just not nearly as big of an impact as if it had been all spent here.
     
    Last edited: Mar 5, 2010

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