More proof that raising taxes doesn't work

[MrBogosity]

This is a study from Harvard economists Alberto Alesina and Silvia Ardagna. The abstract:

We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis.

So, if you're wanting to fix the budget or the economy, the LAST thing you want to do is raise taxes--and you may even want to LOWER them!

According to our results fiscal stimuli based upon tax cut are much more likely to be growth enhancing than those on the spending side. In this respect the US stimulus plan seems too much based upon spending.

The analysis of the present paper suggests that primary spending needs to
be kept under tight control otherwise increasing taxes running after ever increasing
spending will not work.

[AnCap Dave]

Nice. Can I get a link for this? I want to post it at a few places.

Nevermind. Found it myself.

For anyone who wants to read it.

[MrBogosity]

Sorry, I totally forgot the link, didn't I?

[AnCap Dave]

Sorry, I totally forgot the link, didn't I?

Indeed, but never fear for I am at this distinguishable location able to provide a link.

[kiri2tsubasa]

Outside of taxes (income, sales, state, etc) how does the Government get money in the coffers?

[Lord T Hawkeye]

Donates from special interests (ie: bribes) and using the tax money as collateral to take out loans.

They're not kidding when they say governments do not produce wealth.  They don't.

[evensgrey]

Governments that happen to own land can also get money from selling or leasing that land, or selling resources or leasing the right to extract resources from that land.  Of course, most governments aren't terrible interested in resource extraction as they tend to acquire (notice that I am very intentionally not using the word "buy" here) land for the reason of PREVENTING resource extraction from it these days.  We have a fair bit of land not titles to anyone in Canada that does just get leased out for things like logging or mining (due to the details of Canadian property law, NOBODY here is considered to own land, the Government explicitly owns it all, you just hold 'title' to it, which can be revoked without payment at any time) but the money that produces is hardly a drop in the bucket compared to what's spent in most regions.  When the price of oil was so high Alberta made a lot of cash from the tar sands projects (enough that they've never put in a Provincial sales tax like everywhere else has) but that was an anomaly caused by the unusually high price of oil.