Instead of Temporary Fixes, Concentrate on Ways to Grow the Economy

[Adam's Apple]

Other than Japan, American businesses suffer the highest tax burden of any other country. The tax liability hampers their ability to compete in a global market. To stay in business and try to compete, they have resorted to some solutions that have not been beneficial to the country, i.e., moving to other countries, outsourcing jobs, incorporating offshore, etc. Giving temporary tax rebates will not solve these very real problems which will continue long after the tax rebates have been spent. Real solutions are needed or economic downturns will be a regular and severe problem to deal with in the very near future.

Why Tax Rate Reductions Are More Stimulative Than Rebates: Lessons from 2001 and 2003
By Brian M. Riedl, The Heritage Foundation
January 18, 2008

...the 2003 tax cuts lowered income, capital gains, and dividend tax rates. These policies were designed to increase market incentives to work, save, and invest, thus creating jobs and increasing economic growth. An analysis of the six quarters before and after the 2003 tax cuts (a short enough time frame to exclude the 2001 recession) shows that the policies worked:

.GDP grew at an annual rate of just 1.7 percent in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1 percent.

.Non-residential fixed investment declined for 13 consecutive quarters before the 2003 tax cuts. Since then, it has expanded for 13 consecutive quarters.

.The S&P 500 dropped 18 percent in the six quarters before the 2003 tax cuts but increased by 32 percent over the next six quarters. Dividend payouts increased as well.

.The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs--and 5.3 million jobs over 13 quarters.

Critics contend that the economy was already recovering and that this strong expansion would have occurred even without the tax cuts. While some growth was occurring naturally, critics do not explain why such a sudden and dramatic turnaround began at the exact moment that these pro-growth policies were enacted. They do not explain why business investment, the stock market, and job numbers suddenly turned around in spring 2003. It is no coincidence that the expansion was powered by strong investment growth, exactly as the tax cuts intended.

for full article:
http://www.heritage.org/Research/Economy/wm1776.cfm

 

[jillian]

You still insisting that the same policies that have been proven failures should still be followed?

lol... supply side economics is a proven crock.

 

[Paulie]

Anyone who talks about continuing to cut taxes, while not also addressing the need for reduction in spending, knows NOTHING.

You must be a wealthy upper class businessman who doesn't give a shit about tax brackets below you.

Less revenue, and more spending, leads to what's wrong with our economy today.

PERIOD.

 

[Adam's Apple]

If we didn't have all these welfare programs emanating from Washington that eat up the tax dollars, we wouldn't have such a large need for tax dollars. Cut out the waste and live within your means: that's what people should be insisting on as the next big project for Washington. It's not the government's job to take care of every little need that people have.

 

[Paulie]

If we didn't have all these welfare programs emanating from Washington that eat up the tax dollars, we wouldn't have such a large need for tax dollars. Cut out the waste and live within your means: that's what people should be insisting on as the next big project for Washington. It's not the government's job to take care of every little need that people have.

I agree. But it's the government's job to be responsible in our economic matters. They spend out their ass on wasteful things, and the only 2 solutions they offer us are more taxes, which hurt US, or less taxes, which hurt the budget. Either way, it ends up hurting us.

There's too much spending going on, and too much rhetoric about cutting taxes beause idiot voters respond well to "less taxes", while they have no real clue about "cutting spending".

There are CERTAIN things we need to rely on our government to take care of, and they're doing a horrible job at just about all of them right now.