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Economic case for tax cuts rests on shoddy foundation
Posted By Allan Freyer On May 27, 2014 @ 8:00 am In NC Budget and Tax Center | Comments Disabled
Tax cuts never live up to the extravagant promises of job creation and economic growth so often made by their supporters, and last year’s tax reductions are unlikely to turn out any differently. The most recent example is Kansas, which enacted massive tax cuts in 2011. Two years later the state has experienced slower job growth than the national average , contraction in the number of businesses employing people , and loss of its AAA bond rating  resulting from its catastrophic, 50% loss in revenue .
While there remains no consensus among academic economists that tax cuts are a strategy to grow the economy—instead, evidence is mounting of their harm—some think tanks keep trying to play the same hand to get a different result. One example is the Beacon Hill Institute, which has frequently deployed its State Tax Analysis Modeling Program (STAMP) during tax cut debates in various states across the country, including last year in North Carolina. Using this model, Beacon Hill claims to show that lowering taxes, or refusing to raise them, will benefit state economies. In the case of North Carolina, they also went a step further to claim that all income groups get a tax cut on average.
A new report  from the Institute on Taxation and Economic Policy reveals a number of serious flaws in the STAMP approach that undermine the accuracy of its claims. In doing so, it calls into question the rosy scenario Beacon Hill paints for tax-cutting states like North Carolina.
Follow me below the fold for are some of the problems  identified by ITEP:
It’s unlikely that these tax cuts will ever live up to what was promised for them, and that’s because as a strategy, they just don’t work to build a stronger economy for all. Beacon Hill’s flawed analysis can’t change this reality.
Article printed from The Progressive Pulse: http://pulse.ncpolicywatch.org
URL to article: http://pulse.ncpolicywatch.org/2014/05/27/economic-case-for-tax-cuts-rests-on-shoddy-foundation/
URLs in this post:
 slower job growth than the national average: http://www.cbpp.org/cms/index.cfm?fa=view&id=4110.
 and loss of its AAA bond rating: http://www.kansascity.com/2014/05/01/4996352/kansas-bond-rating-dips-as-revenue.html
 report: http://itep.org/itep_reports/2014/05/stamp-is-an-unsound-tool-for-gauging-the-economic-impact-of-taxes.php#.U3-aGyhCyh8
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