PrintDecember 19, 2010
Why the Tax Compromise Won't Work
Many on the right, and particularly those who do not truly understand supply-side economics, are propagating the idea that the extension of the Bush tax cuts will bolster investment by business and will trigger a wave of economic activity, thereby helping to pull the U.S. out of its worst economic malaise since Jimmy Carter. This conclusion is wrong. Moreover, by propagating this pseudo-supply side position, proponents have needlessly made Republicans vulnerable to flanking maneuvers by America's left -- maneuvers that could lead to disastrous consequences for the 2012 elections.If the Bush tax cuts are extended, the average American will see no change in the size of his paycheck in January. Indeed, the tax cut extension (ceteris paribus) will do nothing but allow the individual's paycheck to remain the same.Accordingly, without an increase in take-home pay, the individual's propensity to consume will remain largely unchanged. As such, a substantive increase in...(Read Full Article)
