In a watershed study, former Treasury economists Gary and Aldona Robbins argued a few years ago that tax cuts aimed at capital and business produced the biggest economic benefits. For example, for every tax-cut dollar on capital gains, $10.61 of new GDP is created. For every dollar of accelerated business-investment tax write-offs, $9 of new GDP is created. And for every dollar of corporate tax cuts, $2.76 of new GDP is created.
During the Ronald Reagan 1980s, when a deep recession led to a 10.8 percent unemployment rate, the Gipper cut domestic discretionary spending, lowered tax rates across-the-board (including corporate tax rates) and sped up tax write-offs for business investment. The first two years of that recovery generated nearly 8 percent growth, with hundreds of thousands of new jobs created monthly.
When will Washington come to its senses, and unleash the power of capital and business to end all this pessimism and move us toward real prosperity?