Rather than stimulate the economy, they hold the economy back by creating policy unpredictability and by distracting Washington from crucial long-term reforms that are key to restoring economic growth and creating jobs.
Indeed, this type of temporary tax change is making the entire tax system unpredictable. According to the Joint Committee on Taxation, the payroll tax cut is only one of 84 tax provisions expiring this year, about the same as in 2009 and in 2010. This is 10 times greater than the number of provisions that expired in 1999. As shown in a paper presented this October by economists Scott Baker and Nicholas Bloom of Stanford University and Steven Davis of the University of Chicago Booth School of Business, this increase in policy uncertainty is one of the factors slowing economic growth.
Wednesday, December 21, 2011
John Taylor: Want Growth? Try Stable Tax Policy