Did the 2008 tax cuts work?

HiSpencer -- Many people are just flat out broke and it also depends on the local economy. Here in Greater Cleveland, OH, I think people are suffering then in more robust and larger metro areas that are less heavily dependent on manufacturing.  I ditto Dawn's comment just above.

Our propensity to spend is high and always has been vs. say the Japanese. Regardless what a study or an economist says, I believe we spend what we are accostumed to. If you give me an extra $1,000 there is a percentage I am going to spend, a percentage I am going to save. Doesn't matter where the money came from. So I guess I am saying, yes, I believe tax cuts will help increase economic activity in the private sector.

Thank you

Real tax cuts work.  The best thing we could do right now is cut corporate tax rates to spur job growth.  Cut them enough and companies just might start moving their assets BACK to the U.S..  Look at what happened in Ireland.   Cutting capital gains and corporate taxes as well as upper income tax rates has always lead to revenue growth to the government.  What certain politicians are afraid of is not lack of revenue (which is not true - see last sentence) it's lack of control.  The tax code is largely a set of rules that allow them to "pull the strings" to get the desired effect.    God forbid they lose some control over us and give us a little more liberty. 

It's not an accident that our economy started getting worse when Pelosi took over the spending of our tax dollars. The president can only sign bills or veto bills, the bills come from congress, and since she has been in charge, our spending has breaking records every year. Earmarks need to stop.

Tax cuts across the board is what is needed.

Let the average American stop fearing what his tax bill might be this year and what will happen to his take home pay....he will spend more freely.

Tell companies that they will have a lower tax bill from now on and they will invest in people and technology to grow their businesses...hire more people, buy buildings and expand.

Every time tax cuts are enacted....the economy grows and thus revenue to the Treasury grows. For those who really feel the government needs more money to do the "good" things...this is how to get it. Not by reducing the tax-home pay of private individuals.

The $8000 tax rebate was not a true tax cut...which is why it did very little....make it a permanent part of the tax code and we might see some real changes in behavior. 

Sorry, but I do not think that tax really stimulate the economy... that has not been shown to work, in reality... and when people take a refund and use it to pay down debt, it does not stimulate teh economy because people are paying for things they already own... which means they do not go out and buy new things, in general, which would have an effect on inventories, manufacturing, and general GDP... paying off debt has no impact on this...

I hear all the time that Reagan's tax cuts stimulated the economy... but I am not so sure... other things did that, like massive government spending on millitary, increases in fuel consumption, etc. These things led to jobs, resource use, and the like... without this stuff, I dont believe we would have seen any great changes in the economy, except of course for the then huge deficits we were left with, as we were with the previous administration... smoke and mirrors... that at least is what I see with regard to tax cuts... tax credits, on the other hand, have more impact, as with the home buyer credit, the cash for clunkers deal, etc. These stimulated, albeit for a short time, the economy... but of course, we are all aware of the difference between a tax cut and a tax credit, I am sure.

Studies that ask people how much they saved or spent are only as reliable as the people who answer them.

It's sort of like interviewing people on how well they stuck to their diet.  They always say that they dieted more than they actually did. 

Selective memory makes us feel better about ourselves.

I have always wondered that as long as the money stays IN OUR COUNTRY why almost any stimulus is not a good thing. People always either buy stuff or invest the money with people who put it to work. I know that this is simplistic and sophomoric but the 1930s seem to have proved that not having huge government incentive and intervention for sure does not work. I would rather deal with inflation later than depression now. I have lived through both and happily survived 16% mortgage interest rates and inflation.

Interesting discussion. I don't believe that tax rebates and tax credits stimulate the economy because they are not true tax cuts. They are one-time deals that don't encourage spending. Frankly I don't care whether tax cuts stimulate the economy or not, although I think that they certainly do and they could actually increase revenue. The money belongs to the people who earned it, and the government should be very circumspect about taking it. Government now believes the money is theirs; that is how the concept of "paying for tax cuts" came about. Let people keep as much of their own money as possible - because it's the right thing to do.

Spencer -- Your assertion that "if there were agreement on whether tax cuts stimulate the economy...then partisan differences on fiscal policy would likely evaporate" is severely flawed. There is ample proof that tax cuts are stimulative, as many comments to your post have mentioned. What is in short supply on this subject is critical thinking. It's not rocket science. As Reagan used to say, "Facts are stubborn things."

Spencer - At this point any discussion about tax cuts, tax credits, and whether or not they stimulate the economy is purely academic.  The reality is that our politicians are so mired in "politics" that they cannot enact meaningful legislation.  Washington as well as the media are enamored by the polarization their antics serve to bring about and feed off the rancor stimulated among the populace.  Unfortunately, this seems unlikely to change.

One person said "Sorry, but I do not think that tax really stimulate the economy..."

Actually paying off debt does have a trickle down effect.  By paying off debt over time, reduces the amount of monthly payments and increases the amount of discressionary income at their disposal.  It's slower than just going in hock or any gvt welfare disguised as a rebate, but those are only temporary fixes.

I don't think that people are taking advantage of the tax credit because loan standards have tightened, the economy is unsure, and there's too much bad news being reported.  The only thing that is certain is that taxes are going to go up and the government is going to absorb more of the money that would be spent on goods, jobs and debt.

Right now, the only people buying homes are the ones that can easily afford it or people who have no chance of affording it but thanks to the tax credit, they can live in it for a few years until the forclosure process starts.  The people in the middle are sitting on the fence.

Things will not change with economy until AMERICANS who want to work can get jobs to take care of their families.  It does not matter what the stock market does.  Only then will there be a turn around.

I agree with Jim Towner.  We need to have a serious discussion about the price we pay to live in America.  If we can come to some type of agreement there it creates a basis from which to work.  Otherwise we will be forever pulling each other in our own directions.  Hopefully the one good thing that may come from this deep recession is a sense of frugality amongst Americans.  We need to shed the extra pounds literally and figuratively.  Good post Spencer and best of luck to you.

A one time rebate is not a true tax cut.  I think permanent tax cuts would move this economy, but it needs to be combined with cuts in spending.

More than tax rates, interest rates, or $8000 FTHB credits, the change in the velocity of money, and consumer confidence are what have changed. We went from a -0.5 savings rate in 2007, to a 10% savings rate today. Until total spending returns to where it was, jobs will remain low. No business owners will add jobs for a tax cut. We add employees to serve customers. No extra customers, no need to hire.

We can cut taxes for the coffee shop on the corner, but they can only fit so many tattoed, 20 somethings behind the counter. If no one is coming in to buy coffee, no need for new employees.

If we cut taxes, and also cut spending to not run up deficits, and start laying off school teachers and policemen, and librarians, and immigration officers, VA hospital nurses, (government employees) then there will fewer customers in the coffee shop.

America needs more customers, first. The jobs will follow.

Spencer, have you looked at the FairTax?  It would eliminate the 5 minutes...

As a conservative Republican, it's my personal belief that tax cuts do stimulate the economy, but of course that depends how they are implemented as well.  However, I've come to the conclusion that when two groups that are both smarter than I am, have multiple degrees, and dozens of years of experience still disagree with one another, then it's a little foolish for me to weigh in on the topic.