Wouldn a cut in the corporate tax and capital gains and dividend tax better grow the economy?
Numerous non-partisan government and independent studies agree that corporate tax rate cuts have relatively little ‘bang-for-the-buck’ as stimulus. The Congressional Budget Office say that a reduction in the corporate tax rate is “not a particularly cost-effective method of stimulating business spending” because “[i]ncreasing the after-tax income of businesses typically does not create an incentive for them to spend more on labor or to produce more, because production depends on the ability to sell output.” [1/08] Mark Zandi, chief economist and co-founder of Moody’s Economy.com who was a McCain campaign economic adviser, estimates that every dollar spent through a cut in the corporate tax rate produces only $0.30 of economic activity- one of the three least-efficient stimulus provisions. Regarding the capital gains tax rate, according to a 2003 Congressional Research Service (CRS) report: “A capital gains tax cut appears the least likely of any permanent tax cut to stimulate the econo
