Richardson’s vs. Bush’s tax cuts

Today on New Mexico Politics, I wrote further about the success of Gov. Richardson’s tax cuts and compared their economic impact — as best I could — with those of President Bush.

While I believe that Bush’s cuts had a positive impact, the measurable impact of Richardson’s cuts is greater, largely because we can actually compare their impact on New Mexico with policies enacted in other state. That is just one of many arguments for federalism — that is, the Founders view as embodied in the Constitution that a vast majority of policies should be driven at the state and local level, not in Washington.

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5 Replies to “Richardson’s vs. Bush’s tax cuts”

  1. If you go to the link and scroll down you will see some comments. One commentator, Michael L Hays, makes some key points regarding the relationship between taxes and economic impact. He points out that despite a maximum income tax rate of 90% the economy grew rapidly following WWII. He also points out how spending for WWII ended the Great Depression. Both valid points.

    As Paul points out it’s difficult to make causal relationships with economics data. I agree and that’s why I attack articles that seek to prove there is a relationship when in fact its unknown. In 1981 Reagan made drastic tax rate cuts yet in 1982 the economy went into a deep recession. If tax cuts are such a “powerful” economic driver how could that hold true? The fact is, interest rate hikes to stifle inflation overpowered the tax cuts resulting in a recession.

    1. There’s a lot of reasons for the strong economic growth after WWII. For starters, demand had been pent up by the Depression and by the War. Regardless of taxes, people were ready to consume. Also, all the major industrial economies of the world were in shambles. While I believe that other nations do not “compete” but complement each other, with all other nations in the world dependent on us, we had a unique situation.

      Lastly, as most conservatives conveniently forget, Reagan dramatically increased payroll taxes in 1983.

  2. Richardson’s program regarding the tax on food was largely a sham. Primarily due to the legislature passing a half-cent on everything else (can we say big ticket items) during the same session the food tax was removed.

    Whatever else the food tax might have accomplished it did little to help those who were already in line for rebates, food stamps and other favored treatment.

    Add to the above his 200 million rebate in 2009 which served to cause the legislature to scramble this year to raise another one cent on gross receipts and other hoop-jumping escapades, while giving the sap citizens a paltry amount from the rebate … his tax “cutting” program in general was a flop.

    A tax cut can turn into a butt-biter if one forgets to consider the stuff hidden under the bull butter.

  3. When will people wake up and realize that the government doesn’t have any money except for that received through taxation on persons or business who in turn get theirs from you and me. Wake up and get your head out of the sand.

  4. To Mark R’s comments about Hays’ editorial, the WWII tax rate related to the depression only in what the revenues purchased. In WWII, government spending went to the war effort, which, in turn strengthened our manufacturing base. The projects closest to these targets in the “Stimulus” attempts were the “shovel ready” ones that our president now admits didn’t exist. Most of the money has gone to prop up state pensions and other, more direct payola to unions. So, on the one hand WWII spending buttressed US productivity. The spending today supports the parasites that are attacking US productivity.

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