Where's Glenn Hubbard When You Need Him?
May 12, 2003
Back in January, Bruce Bartlett wrote that the departure of Council of Economic Advisers Chairman Glenn Hubbard from the White House reduced the chances of getting a good tax bill this year. Unfortunately, his prediction is coming true.
According to Bartlett:
- Hubbard was the key person who convinced President Bush that elimination of the double taxation of corporate profits should be the centerpiece of his tax proposal.
- Hubbard is probably the leading expert on the subject in the United States among economists, and author of a definitive study on the subject that was published by the Treasury Department in 1992.
As Bartlett explains, Hubbard's reasoning is impeccable:
- Double taxation of corporate profits raises the cost of capital, reduces investment, slows growth and costs jobs.
- That is why almost every other major country offers some provision for redressing double taxation, according to a Cato Institute study.
- Still, it is important to keep in mind that reducing or eliminating the double taxation of corporate profits is only a means to an end, not an end in itself.
- The goal is to raise growth and incomes, and President Bush's plan is just one way of doing so.
If Glenn Hubbard were still in the White House, Bartlett says he has no doubt President Bush would understand that passing legislation that will boost growth by cutting the cost of capital and should be the legislative goal. Unfortunately, Hubbard's successor, economist Greg Mankiw, is still unconfirmed by the Senate, and thus in a weaker position to exercise influence. In fact, the whole Council of Economics Advisers has been physically banished from the White House.
Source: Bruce Bartlett, "Where's Glenn Hubbard When You Need Him?" National Center for Policy Analysis, May 12, 2003.
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