Timmy elsewhere

At the ASI.

Proof that tax cuts do indeed grow the UK economy.

3 thoughts on “Timmy elsewhere”

  1. Is there necessarily symmetry in the equation? The report says a 1% cut in taxes leads to an immediate GDP increase of 0.6%; it did not say an increase in tax would cause a 0.6% decrease in GDP. At present is it likely to be greater than that?
    Rather grotesquely, Richard Murphy and a mate at Compass built an entire argument around IMF figures that showed of all factors involved in a focal contraction, a reduction in gov’t capital expenditure had the greatest negative impact on GDP. They decided this proved that an increase in the same would have a huge expansionary impact on GDP. Well Capital expenditure doesn’t work like that.

    Tim adds: Yes, he does note the symmetry in the paper.

    A more reasonable criticism would be that this is the marginal effect at around this sort of level of taxation. I’m sure if taxation were at 5% of GDP (or 95% of GDP) that the effects would be very different.

  2. I was skim-reading; I should go back and have another look, taking my time! And yes, the effects at different levels of taxation would differ. As to symmetry: aah Tim, I really would like to have the time to look at this. Thinking again, my logic (for what that’s worth) suggests the difference may be timing; a negative impact occurs more quickly and is a more short-term phenomenon. I would be grateful for more suggested reading on this.
    However, the immediate short term now involves a barbecue. A real barbecue hosted by friends who lived in Sutebol for 20 years. So not “cooking outside”.

Leave a Reply

Your email address will not be published. Required fields are marked *