Re: Brownback Tax Cuts a bust...Kansas State Legislature now fixing to repeal
1. Actually I like discussing things, when participants don't tell me about my not knowing my profession with a chip on their shoulders.
OK, understood, but it just is customary, common courtesy, to provide citations when asked if you're referencing the literature for your conclusions. That's especially true with discussions among other people at least familiar with the topic.
2. As to specificity, you are quite right. At one point, I believe in the thread, I described this briefly. Of course each fiscal activity does have a specific set of multipliers. And it is also quite true that most empirical research focus on a specific situations, though, not all analyse the mix in the same detail.
That's just another way of saying that the conclusions about the "tax or spend" question are highly facts and circumstances dependent, which is why it's obviously so critical to cite the actual studies.
As to the "always" I would be happier with a "generally". It is so true that it is a rather robust rule that the government producing private goods will reduce the efficiency of the society compared to private production. It will generally be better than no production of the good. It isn't even totally true that taxes will "always" reduce efficiency. It is just the good rule. But to improve the negative impacts of external effects etc taxes can increase system efficiency for example.
I just do not agree that it's a "rather robust rule" in anything but theory, as opposed to real world public policy choices. Just as an example, nearly every analysis of the benefits of tax cuts I've seen assumes that the benefits are maximized or even
positive only when the tax cuts are offset at least in large part by spending cuts, but at the national level in the U.S., tax cuts are nearly always borrowed.
I don't endorse
this paper in any way, but I do believe the people at Brookings are pretty honest shooters, and they find that the effect of taxes on GDP is quite small, and limited to certain types of tax cuts, and when at least mostly offset with spending cuts. That seems about right and consistent with most of the literature I've seen. The conclusions also ignore, as they must, equity effects, so even if a policy maximized growth if it also exacerbated already growing inequality, that policy might not be sustainable long term even IF it would maximized GDP - the political climate won't allow it.
In any event the point of citing papers is so others can read these sources and come to their own conclusions about how broad and narrow are the conclusions.
