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Re: Response to "Scoring McCain's Tax Proposals" by the McCain Campaign
by
Anonymous
Dear Mr. Holtz-Eakin:
The fundamental belief underlying your proposed tax cuts is that smaller government results in more prosperity.
However, as your fellow economists have shown quite conclusively (as I think you must be aware), that belief is faith-based, not grounded in facts.
In developed countries like the US, with tax burdens ranging (hugely) from 23 to 49% of GDP (federal, state, local combined), over the last twenty, thirty, forty years, there is *no correlation* between government size and growth.
See in particular Barro 1996 (and ensuing), and Nijkamp and Poot's 2003 meta-analysis. I'm sure you're familiar with these. Both linked and discussed here:
http://trueconservative.typepad.com/trueconservative/2008/02/small-governmen.html
Many countries prosper, and proffer generous social support systems, with tax rates that far exceed those in the US.
With the lowest tax burden in the developed western world, it is actually more conceivable that lowering taxes further--with the government evisceration and/or debt burdens that would result--would push us below the level at which a modern, advanced society can thrive.
If there is a threshold effect, dropping below that level could be devastating to American prosperity--and power.
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