In a few posts, we’ll begin digging through the evidence on taxation and economic growth. In the meantime, I just wanted to ask if you were familiar with:
Now, neither of those papers discusses the rich as its sole focus – but let me put forth a wild idea … don’t the Keynesians argue that in some cases, like today, it doesn’t matter what money gets spent on, just so that the money gets spent? And don’t the tax-the-rich folks argue that the rich waste their money on frivolities? That the rich don’t really get any happiness from their spending?
But the papers above suggest that multipliers on taxes are far larger than multipliers on government spending. That also must mean that the “shrinkipliers” must be larger for increases in taxes than they are for reductions in government spending. And we seem to agree that the rich do spend their money somehow. Well, if you are a dedicated Keynesian, and you understand that papers such as the ones above actually exist, then why do you care? Why are we trying to dress up the sentiments in economics when that has nothing to do with it?