Thursday, June 29, 2017

Low taxes and economic stimulus

The American right has said it all along and more particularly since Ronald Reagan: “Cut taxes and the economy will flourish!”

With a tax rate among the lowest among developed nations, Americans aren't particularly burdened by fiscal obligations, yet the concept of low taxes as some magical economic stimulus has become the Republican mantra and in practice doesn't work; at least, that's my point of view.

Let's take a few moments to understand why it hasn't. 
  • Entrepreneurs don't need tax cut to start a new venture. It's ingrained in them as they feel the urge to take control over their destiny and make their marks on the world. 
  • Established businesses hire, improve or expand when they see an opportunity in the market and do it before it goes away. 
  • Passionate professional follow their instinct and what possesses them, in creating something they love because it's irresistible, not because some manipulative politician is lowering their tax rates. 
  • If there were folks that would invest just because of some tax break, they'll do it just for some venal pursuit and in most cases, sooner or later, it would be guaranteed to peter out! 
  • Finally, most rich people will take any tax break they can get, stash them preciously away and won't even re-invest them... 
Take that fellow Republicans!

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