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The Economy

While not every aspect is rosy, there was good economic news today. I found the following headline at Fox News:

November Employment Report Upbeat as Economy Adds 132,000 Jobs; Unemployment Rate Climbs to 4.5%

Note the wording: unemployment  climbs to 4.5%.5%  is generally considered full employment. The trend in jobs has been very good for a couple of years now, as has the stock market. Another positive story about the economy appeared at Reuters.

The evidence is very good that the Bush tax cuts have been good for the economy. They have increased revenue, just as the Reagan tax cuts did.
The case for the validity of the Laffer curve gets better and better all the time.

The correlation between low taxes and a strong economy is very strong.  Many are dismissive of "tax cuts for the rich". There are a couple of problems with this argument. The first is the problem of defining the word "rich". For many people it means "anyone richer than me". Others think that any tax cut that  benefits rich people, regardless of who else  benefits, is a tax on the rich.  This argument is often used in support of the capital gains tax. Rich people pay it, so it's a good tax, even if it hurts people who are not rich. (FULL DISCLOSURE: I am one of the "not rich" people I refer to. I would have been hurting recently if it weren't for Bush's cuts in the capital gains taxes.)

That second is probably the most perverse argument of all. I remember arguing with my father about it. I told him that the rich paid more money in taxes after the Reagan tax cuts than they did before. His answer was not to question my facts but to point out that they probably had more money left over afterwards.

Is that the reason for  taxes? To punish the rich?  I thought the point was to raise revenue.

It doesn't take a Nobel prize winning economist to see that if you punish  wealth creation that  less wealth will be created. Fortunately,, there are still a few people, such as Steve Forbes (as explained in this article) who understand this.