This thread reminded me, Christina Romer, Our Dear Leader's first chief economic adviser, and her husband (both Berkeley leftie economics professors), published a very compelling paper that demonstrated that for every dollar in tax increases, there is produced a three dollar drop in economic output. And, naturally, the reverse is also true that each dollar of a tax decrease is followed by a three dollar increase in GDP.
They found that the impact of taxes is primarily found in investment. Take away a rich guy's dollar and give it to some poor guy, you get a brief rise in the sale of beer and pork rinds. Let the rich guy keep it, and he'll invest in some risky start-up that creates new jobs and wealth.
[Our baseline specification implies that an exogenous tax increase of one percent of GDP lowers real GDP by almost three percent]
They found that the impact of taxes is primarily found in investment. Take away a rich guy's dollar and give it to some poor guy, you get a brief rise in the sale of beer and pork rinds. Let the rich guy keep it, and he'll invest in some risky start-up that creates new jobs and wealth.
[Our baseline specification implies that an exogenous tax increase of one percent of GDP lowers real GDP by almost three percent]
