Does deregulation and tax cuts boost growth
significantly?
Bloomberg’s Noah Smith notes:
“With Republicans
now in control of the White House and Congress, we’re probably going to see tax
cuts, deregulation and weakening of rules protecting labor unions. What should
we expect from these policies? One way to answer this question is to look at
states where free-market approaches have been tried…
In recent years, a
number of states have experimented with the kind of low-tax, anti-union
policies that many Republicans and free-marketers like. These include Kansas
under Governor Sam Brownback, Wisconsin under Scott Walker in recent years, and
Texas going back several decades….
A better comparison
is Kansas and Nebraska. Six years ago, Brownback began a program of big tax
cuts in Kansas; Nebraska didn’t follow suit….
So Brownback’s big
experiment looks as if it has done very little to boost the state’s economy.
Its only real effect has been on the state’s finances -- the tax cuts have
created a large and growing state deficit.”