The tax myth

Updated
By Michael Scotto
The tax myth
The tax myth

President Obama threw out some zingers today in his critique of the GOP’s Master Theory on how to fix the economy.

“You want to make a restaurant reservation or book a flight? You don’t need the new iPhone; try a tax cut,” the President joked. “Try and drop a few extra pounds? Try a tax cut. They’ve got one answer for everything.”

The President may be onto something. According to a highly informative column by the New York Times’ David Leonhardt, tax cuts may actually lead to economic decline not growth. On the show today, Alex provided us with her own “visual” of what the economy looks like when politicians take an ax to taxes. Take a look below. 

Here is the actual chart, courtesy of the New York Times. It shows that economic growth went up when the first President Bush and President Clinton raised taxes, but plummeted when President George W. Bush slashed them not long after taking office.

Leonhardt does make the point that some economists think overhauling the tax code could spark growth, but the problem with Governor Romney’s plan is that, well, there is no plan – and depending on which tax breaks he might keep or eliminate, it’s possible another across-the-board cut could keep that line on a path…right to the basement. 

The tax myth

Updated