John Redwood shows us how not to argue for tax cuts. He says:
This is a plea for early action to cut our tax rates. If you keep your tax rates down, the economy grows much quicker.
Of course, it's trivial that, if taxes are too high, cuts in them will boost growth. But it's doubtful that the UK economy is at this point.
We had an experiment in cutting tax rates back in 1988, when Nigella's dad cut the top tax rate from 60% to 40%. It's not obvious that this boosted the economy. Official figures* show that in the 18 years since then, output per worker in the whole economy has grown 1.7%. In the previous 18 years, it grew 2.1 %.
Sure, there are countless other influences upon growth. But this shows that the idea that tax cuts raise effort and efficiency doesn't leap out from the data. And laboratory (pdf) experiments also suggest that UK tax rates are not so high that cuts will stimulate greater effort.
This does not mean there's no case for cutting taxes. It's just that, as some of the Stupid Party realize, the argument is a moral, not a macroeconomic, one.
Redwood is committing the same error of which I accused the MSM in their discussions of immigration - he's using consequentialist arguments where he should be using deontological ones.
This raises a worrying question. Has utilitarian managerialism so conquered public discussion that politicians are losing the ability to use other forms of moral reasoning?
* Code A4YM in statbase.
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