Sunday, February 01, 2009

Julie Bishop "explains" herself

...raising more questions.

Joshua Gans reckons the real slip up is this:

"And there’s plenty of evidence to show that the multiplier for a tax cut is greater than that of a direct government spend."

He asks: "Whadda you say what? Since when?"

Here's her "clarifying" statement released late today:

"There is substantial evidence to show that tax cuts, including lower marginal tax rates across all tax brackets and cuts to corporate tax, increase productivity by providing incentives to individuals and businesses to work, invest, take risks and pursue entrepreneurial activity.

The new growth in jobs and output will expand the tax base and thus tax revenues.

It has been the experience in Australia and other OECD countries that reducing tax rates and expanding the tax base increases tax revenues. This requires reductions that are durable, credible and wide-ranging and that help reduce the distortions taxes create to incentives to work, save and innovate."


Show us the evidence, Ms Bishop. This will be fascinating.

My account of some related evidence is here.

And also here and here.