THE BLOG
02/19/2008 08:29 am ET | Updated May 25, 2011

Conservative Myths About Taxes

There is a relentless drumbeat from the conservative press that low taxes are always and everywhere the cure for economic ailments. It is louder in campaign season. The editorial pages of The Wall Street Journal are the primary repository of the distorted claims. They are simply not true.

Last, week Stephen Moore wrote that fears of future tax increases should Democrats win the nation's highest office are now driving the economy into recession. This was distortion of a particular high degree.

In today's paper, William McGurn, an executive for the paper's parent company, writes that the press cannot admit how beneficial the Bush tax cuts were for the economy. It produced many months of jobs, he says. He leaves out that it was at a very low rate of job growth and that wages did not rise over this period. No matter. He also leaves out the perverse but real stimulus of military spending for the economy.

"Leaving out" is classic Journal editorial technique.

Last year, the former Senator and future presidential candidate , Fred Thompson, wrote a brief piece entitled, "Closed Case: Tax Cuts Mean Growth."

The facts are significantly different than all this. In the short run, tax cuts may help growth. Keynes said so. But there is no evidence that low-tax nations grow faster than high-tax nations, as hard as some economists push the case. It even sounds right. Martin Feldstein, the former Reagan economist, leads the pack. His research has foundered on the rocks of more serious analyses time and again.

For those interested, look at Peter Lindert's comprehensive analysis of the research and his own analyses in a book published a couple of years ago called Growing Public. What does Lindert conclude? He writes this: "It is well-known that higher taxes and transfers reduce productivity. Well known -- but unsupported by statistics and history."

Or Google Joel B. Slemrod of the University of Michigan. He has also done critical research that is serious and a true attempt to get at the truth of matters. He draws conclusion similar to Lindert's.

Or just look at the history of the U.S. The income tax was created in 1913 and the economy of the U.S. grew as rapidly and usually more rapidly than it did over the course of the 1800s. Even as income tax rates rose up to World War II, there was no reduction in the rate of growth.

Or finally remind yourself that before the Clinton boom came the Clinton tax increase on high-income individuals.

Why? Because government spending programs are needed to support growth: roads, schools, public health, research and development, the implementation of laws, and the protection of relatively free markets.

As campaign season gets even more heated, there will be a lot of talk about tax cuts and growth. But the talk should be about how to make government work as well as possible to support prosperity and the fair distribution of its bounty.