Thursday, November 24, 2005

Who, If Anyone, Do Tax Cuts Help?

There is a good NYT article by Robert Frank, asking what I think is very good question, in what sense did the recent round of tax cuts actually help anyone, including the well-to-do? He argues that many of the cuts in spending that are being proposed to fund these tax cuts, from infrastructure support to research to food inspections, are will hurt the wealthy as well as the poor. His main point is one that I very much agree with. The tax policies of the past five years benefit only the very wealthy and even at that only over the very short term. As such these policies are extremely foolish.

I also think that there is a flip side to this that Democrats could exploit. Namely that tax cuts on the middle and lower classes, with a repeal of the Bush cuts on the wealthy, would in the long run benefit the wealthy as well as the poor. Indeed, conservatives have long been arguing that the impact of tax policy is not always intuitive, specifically that cutting tax rates can raise revenue. I would like to see liberals take over this argument and arguing that raising tax rates on the wealthy can increase their wealth by directing those taxes to infrastructure, research, and general safety and stability for the populace as a whole.

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