Larry Summers: Tax increases won’t hurt economy

November 2, 2009

Here is Obama economic guru Larry Summers at the Economic Club of New York: “I don’t find there to be much evidence that suggests that raising top marginal tax rates from 35 to 39 percent that will be implicit in the repeal of the Bush tax rates will do substantial damage to incentives in the economy.”

1) Remember that the 1993 Clinton tax increases — the Bush tax cut  expiration would restore some of those rates – -happened when the economy had been growing briskly since the 2Q 1991. A very different situation today.

2)  Here is WH CEA Chair Christina Romer’s take on higher taxes when she was a econ prof at Berkeley: “Tax increases appear to have a very large, sustained, and highly significant negative impact on output … [and] that tax cuts have very large and persistent positive output effects.”

3) This tax increase would be in addition to possible healthcare and energy taxes.

9 comments

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Does anyone believe Larry Summers? Of course, tax increases have a negative impact on the economy. I’m not in the very top tax bracket, although you don’t have to be a millionaire to be there, but tax increases place a definite negativity on my role as a consumer. Of course if I have to pay more of my income in taxes, I’ll have less to spend as a consumer. With all the spending this administration is doing, I already have cut back drastically because I know as soon as “Obamacare” is passed, I will start paying more for health care as well as everything else. This tax and spend administration has to be reined in. We need to get rid of their majority in both houses of Congress as a beginning.

Posted by Posey | Report as abusive

This is exactly the problem. We will NEVER have a sustainable economy on the consumption model. It fuels debt with no product of value in exchange.

Taxes on the wealthiest to be reinvested into the citizenry will assure a stable and sustainable economic path. Doing more of what we have been doing will only lead to more of the same (unemployment, massive debt, and homelessness).

The business sector was loud in its declaration of “survival of the fittest”, when the economy was doing well only two decades ago or less. But those that were elected in order to ensure the interests of the individual citizen, were lured and enslaved by the profits and benefits that corporations (being treated as citizens under our system of law), were able to provide.

As far as “Obamacare” goes, it’s interesting to note how many people waved the flag and rallied to the “fight against terror”. That ridiculous war is one of the main reasons we’re in debt right now. If as a country we were willing to go into debt in order to kill. Then surely we can make a few economic adjustments to ensure that all citizens have access to something as fundamental to quality life, as health care.

Who gives a damn if costs more? We’re saddled with debt because we thought it would be a good idea to invade a country that had nothing to do with 911 (Iraq), only to let Bin Laden make a clean getaway and die a free man. He’s probably getting it on with his 77 virgins right now.

That was wasted money. I would rather pay a bit more tax for the kind of health care I know our healers are capable of delivering, in full confidence that I won’t be turned away or denied treatment because my plan doesn’t cover it.

posey…Bush enjoyed 6 of his 8 years with a Republican congress. They are the guys that set this whole mess up. Now you want to put them back in because you don’t agree with the way those problems are being addresses. Bush is the one who started the bailouts of corporate America. He gave AIG their first billions. Name one tax that has increased since Obama has come into office.

I heard Glen Beck call the Obama government “marxists” today on the radio. Go look up what marxism is. The social programs being rolled out at the moment (stimulus package) are to try and save jobs and the economy. The government quits spending right now things will get a lot worse. The right is name calling and trying to pin the mess they created on the Dems. The country is in debt something like $14Trillion. Obama’s $787B Stimulus package is the cause of all our woes.

Obama’s $787B Stimulus package is NOT the cause of all our woes.

Bill in Arizona-”Name one tax that has increased since Obama has come into office.”

Cigarettes.

You are wrong…that tax was set to go into place before Obama went into office. Cigarette taxes have been increasing over the past couple of years. In addition, this tax money is used to help offset healthcare costs. Which increase because of smokers.

The newest tax raised the federal rate from $.39 / pack to $1.01 / pack, and was signed into law Feb 4, 2009.
http://en.wikipedia.org/wiki/Cigarette_t axes_in_the_United_States

And it doesn’t matter if the taxes have been going up for years, or what it funds. Higher taxes are higher taxes.

[...] committed an unpardonable sin – he revealed two unpleasant truths in a single sentence. Summers said, “I don’t find there to be much evidence that suggests that raising the top marginal rates from [...]

Consider the source, period! Why should We be required to pay higher taxes to make up for the incompetence, greed and arrogance of both sides of the political aisle?

Posted by RMM | Report as abusive