….but like other too-good-to-be-true patent remedies, the idea that tax cuts for business stimulate investment and growth just won\’t die.
Sure, the reason it won\’t die is because it is true.
From the OECD:
The results of the analysis suggest that income taxes are generally associated with lower economic growth than taxes on consumption and property … These findings suggest that a revenue-neutral growth-oriented tax reform would be to shift part of the revenue base towards recurrent property and consumption taxes and away from income taxes, especially corporate taxes.
Note that this is nothing to do with tax levels: it\’s to do with the tax mix. The more you bias your tax collections to the corporate income tax and the less towards consumption (ie, VAT) and property taxes, the lower will be the growth rate for any given level of total revenue collection.
It\’s one thing to argue about higher tax levels, greater public services and so on, I might disagree with the TJN but that\’s just fine. But for them to continue lying about the basic economics of taxation is really just not on.