The Economic Case for Tax Cuts

by Don Boudreaux on May 26, 2009

in Myths and Fallacies, Taxes

Here’s a letter that I sent on Sunday to the New York Times:

You write as though the only reason to cut taxes is to promote more consumer demand (“The Sorry State of the States,” May 24).  You’re mistaken.

By far, the chief economic reason for cutting taxes is to increase the return to productive activity – to increase the return to investment, to risk-taking, to creativity, to work.  The economic justification for lower taxes rests squarely on the understanding that cutting marginal tax rates makes profitable many productive efforts, including hiring more workers, that are unprofitable at higher tax rates.

Why does this straightforward point seem so taxing to your editorial-writers’ comprehension?

Donald J. Boudreaux


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