September 7, 2016

It's Illogical to Think Tax Increases Are Always Good

Donald J. Boudreaux

Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
Summary

This train (wreck) of fiscal events raises a question: Will Paul Krugman and other “progressives” who routinely ridicule as foolish all claims that cuts in marginal tax rates aren’t necessarily fiscally irresponsible now be equally dismissive of claims that increases in marginal tax rates are necessarily fiscally responsible?

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The Aug. 26 “Notable & Quotable” from the Yankee Institute on the 25th anniversary of Connecticut’s income tax justifiably scoffs at the wildly mistaken prediction made in 1991 that the introduction that year of a state income tax in Connecticut would eliminate what then-Gov. Lowell Weicker called that state’s “orgies of spending”—spending that, between the introduction of the tax and 2014, grew 71% faster than inflation.

This train (wreck) of fiscal events raises a question: Will Paul Krugman and other “progressives” who routinely ridicule as foolish all claims that cuts in marginal tax rates aren’t necessarily fiscally irresponsible now be equally dismissive of claims that increases in marginal tax rates are necessarily fiscally responsible? I doubt it. But it will be interesting to behold the verbal pirouettes performed by the likes of Mr. Krugman & Co. as they persist in trying to explain that cutting taxes is by nature fiscally reckless while raising taxes is by nature fiscally prudent.