Taxes and Economic Growth

Studies | Economy | Taxes

No. 292
Tuesday, November 21, 2006
by Gerald W. Scully


Conclusion

"An optimal tax rate would benefit all of society, not just a select few."

Most Americans, scholars included, subscribe to the Anglo-American public finance tradition of thinking of government as benign. From this point of view, policy choices often seem irrational and enigmatic. Public choice theorists see the behavior of the politicians and the constituencies that elect them as rational, self-interested and self-serving, having more to do with re-election and rent-seeking than with economic efficiency. In this view, excessive taxation may arise simply because the tax rate consistent with political equilibrium among competing special interest groups exceeds the rate that maximizes economic growth.

NOTE: Nothing written here should be construed as necessarily reflecting the views of the National Center for Policy Analysis or as an attempt to aid or hinder the passage of any bill before Congress.


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