Sunday, January 20, 2008

We've Tried Tax Rebates Before; They Don't Work

There is virtually no empirical evidence that tax rebates are an effective response to economic slowdowns. The main benefit of a tax rebate would seem to be political -- giving politicians a way of appearing to be doing something about the nation's economic problems that is superficially plausible.

It's an insult to Keynes even to call a tax rebate Keynesian economics. It should be called "feel good economics" because its only real effect is to make politicians feel good about themselves and buy re-election with the public purse.

~Bruce Bartlett in Saturday's WSJ editorial "Feel Good Economics"

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