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Baross argued that the loss from price cuts will be more than made up by the extra income from boosted traffic numbers. This revolutionary idea was a mirror image of one argument for tax cuts used by neolibs today, that economic growth will raise tax revenues back to the old level: instead of counting on the sustained success and goodwill of the richest, it was counting on the poorest to go trying their luck on now affordable trains.

One of the "fathers" of supply-side economics, Bruce Bartlett says this:

The original supply-siders suggested that some tax cuts, under very special circumstances, might actually raise federal revenues. For example, cutting the capital gains tax rate might induce an unlocking effect that would cause more gains to be realized, thus causing more taxes to be paid on such gains even at a lower rate.

Some tax cuts, very special circumstances... Certainly not always.

The way modern Bush advisors (or "knowledgable" supporters) argue to cut taxes more, can be used every few years, under any taxing regime. Why not cut taxes down to zero at once? The double irony is that that the same "knowledgable" supporters argue that the government should not spend much at all. In effect, the government does not need higher revenues. So why argue that tax cuts are needed to increase revenues? The third dimension of irony is, of course, that presicely the "supply-side" US administrations turn out to be biggest spenders.

by das monde on Sun Apr 8th, 2007 at 04:09:19 AM EST

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