Did the IGM Reject Laffer Optimism or Old-School Keynesianism?
When I first read David’s latest post, I mentally reversed the true results. I thought that every expert on the panel agreed that:
A cut in federal income tax rates in the US right now would raise
taxable income enough so that the annual total tax revenue would be
higher within five years than without the tax cut.
Given my mis-reading, I immediately thought, “Oh, the IGM universally accepts the Keynesian view that fiscal stimulus would have a big economic effect – big enough to actually increase tax revenues over the medium-run.”
I quickly realized my mistake. But my mistake is fruitful nonetheless. Yes, like Mark Thoma, you could read the responses as a verdict on Laffer optimism. However, you could just as easily read the responses as a verdict on old-school Keynesianism. Which raises an interesting question: If the question had been framed in explicitly Keynesian terms, would the expert verdict have remained the same?
P.S. If you think this is a stretch, consider: supply-siders have long pointed to the Keynesian-inspired Kennedy tax cuts as a vindication of supply-side economics.