Do you consider the major provisions of the 2001 tax cuts to be supply side (pro-growth) in nature? Did the majority of the 2001 tax cuts reduce tax rates on work, saving, and investment?
It's very easy to forget about Keynesian style tax cuts when they have little or no impact on economic performance.
I really enjoyed the check I received in the mail, but I never considered that a supply side rate cut. [Toddsterpatriot]
Do you consider the major provisions of the 2001 tax cuts to be supply side (pro-growth) in nature? Did the majority of the 2001 tax cuts reduce tax rates on work, saving, and investment?
It's very easy to forget about Keynesian style tax cuts when they have little or no impact on economic performance. [Mase]
According to supply-sider Larry Kudlow, they were supply-side. In his May 29, 2001 National Review article, Kudlow used the word "supply-side" twice and never uttered the word "Keynesian". For example, he stated:
The new take-home rate is therefore nearly 12% better than the old retention rate. This is the new incentive effect. In particular, since top bracket taxpayers have the highest saving rates, Bush’s supply-side tax cut increases the rate of return on capital investment.
Also, an April 27, 2001 Heritage Foundation paper titled "The Economic Impact of President Bush's Tax Relief Plan" concludes:
This dynamic analysis shows that President Bush's tax plan will boost economic activity, create over 1.6 million new jobs, and strengthen the incomes of taxpayers. The plan would reduce excess tax revenue and effectively pay off the publicly held federal debt by FY 2010. Real economic growth, which recently has slowed dramatically, would rise an average of $147 billion per year from FY 2002 to FY 2011. On average, a family of four's after-tax budget would increase by $4,544, which would lead to an increase in consumption and saving. Spending on personal items such as health care and school clothes would increase by an average of $163 billion, and America's anemic savings rate would increase from 1.9 percent to 2.9 percent.
Of course, after federal revenues plunged for several years following the 2001 tax cut, the Heritage Foundation changed their tune, releasing a June 7, 2005 Heritage Foundation paper titled "A "Supply-Side" Success Story". It states:
Tax cuts based on the Keynesian notion of putting money in people’s pockets in the form of rebates and credits do not work—and these are the tax cuts that dominated the tax legislation approved in May 2001. Supply-side tax cuts, by contrast, do improve economic performance because they reduce tax rates on work, saving, and investment. And since lower tax rates on productive behavior dominated the May 2003 legislation, it is hardly surprising that the economy has responded positively
What's hardly surprising is that supply-siders changed their tune about the 2001 tax cut after revenues plunged. Can you provide a link to any well-known supply-siders who declared Bush's 2001 tax cut to be Keynesian at the time it was enacted?
More importantly, did you consider Reagan's 1981 tax cut to be supply-side? As the graphs and tables at http://home.att.net/~rdavis2/recsrc.html show, revenues decreased from 1981 to 1983. They also show revenues rising sharply from 1993 to 2000 following the Clinton tax hike. How do you explain that using supply-side theory?