The potential gains from improved stabilization policies are on the order of hundredths of a percent of consumption, perhaps two orders of magnitude smaller than the potential benefits of available "supply-side" fiscal reforms.
- Robert E. Lucas, Jr.
"Macroeconomic Priorities," 2003
Presidential Address to the American Economic Association, January 10, 2003.
I find it remarkable that virtually all of the large difference in labor supply between France and the United States is due to differences in tax systems. I expected institutional constraints on the operation of labor markets and the nature of the unemployment benefit system to be more important. I was surprised that the welfare gain from reducing the intratemporal tax wedge is so large.
- Edward Prescott
"Richard T. Ely Lecture: Prosperity and Depression: "American Economic Review, 92(2), May 2002, p. 9.
It is a paradoxical truth that tax rates are too high today and revenues are too low, and the soundest way to raise the revenues in the long run is to cut the rates now.
- John F. Kennedy
Speech to Economic Club of New York, December 14, 1962.
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce price when you were already making a loss.
- John Maynard Keynes
The Means to Prosperity (1933): p. 338)
The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.
- Andrew Mellon
Taxation: The People's Business (1924), p. 13.
Supply-side economics .... does not conclude that a general reduction in tax rates would increase tax revenues, nor did any government economist or budget projection by the Reagan Administration ever make that claim.'
- William Niskanen
Member of the Council of Economic Advisers under President Reagan.
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