Friedman: Tax Cuts for the Sake of Smaller Government
January 15, 2003
Nobel laureate economist Milton Friedman applauds tax cuts primarily on the grounds that they help rein in growth of government spending. Government spends roughly 40 percent of our incomes, and U.S. residents and businesses spend an additional 10 percent of income in response to government mandates and regulations.
According to Friedman:
- The only way to cut government down to size is through tax cuts.
- Tax cuts may initially raise the deficit above politically tolerable levels -- but the longer-term effect will be to reduce spending.
- Tax cuts that increase incentives to produce and that eliminate distortions in the price system -- supply-side tax cuts -- both restrain government spending and increase future income and current wealth.
Source: Milton Friedman (Hoover Institution), "What Every American Wants," Wall Street Journal, January 15, 2003.
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