Tuesday, November 11, 2008

Changing my mind on tax cuts

Up until now I had been a believer as tax cuts both as a way to help stimulate the economy but also as a way to keep Governments lean. I do accept the Keynesian argument that in recession we might have to let borrowing increase, although the amount is up for discussion.

However, now that all 3 parties main are falling over themselves to promise tax cuts my natural skepticism is raising alarm bells. Ever since we were suckered in to the Common Market by all the great and the good supporting it I have held the view that if there is no serious political opposition to something it is probably bad thing ie if something seems too to good to be true, it probably isn't.

I need to think about this dilemma a bit more.


Mark Wadsworth said...

That might be because none of them are proposing actual tax cuts?

As to Labour, a tax cut without a spending cut is just deferred taxation.

The Tories are all over the place. They've promised to freeze council tax. Morons. How does that stimulate the economy? Besides overall reduction of deadweight cost of taxation/waste, tax cuts mainly stimulate economy if you cut rates in the future.

The Lib Dems have had a couple of good ideas but their bad ideas (increasing green taxes and capital gains tax) cancels it all out again.

The Great Simpleton said...


I agree. In fact I am even more concerned that as all 3 main parties are advocation tax cuts to score political points its even more of a bad idea.

All we'll get are unintended consequences.