# Let's talk about supply side economics **URL:** \ **Category:** Great Debates\ **Created:** [February 26, 2015, 4:21pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670 "2015-02-26T16:21:46Z")\ **Posts on this page:** 16\ **Page:** 4
**Author:** ![eschereal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eschereal/32/18939_2.png) [@eschereal](https://boards.straightdope.com/u/eschereal)\ **Post date:** [March 14, 2015, 8:20pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/61 "2015-03-14T20:20:41Z")
> [@jtgain](#): > > Again, this is simplistic, but money in the hands of business owners creates more wealth which then “trickles down” to others through employment. Yes, it is ridiculously simplistic. Those who have/control large amounts of wealth already spend money at a fairly consistent rate, giving them more is unlikely to increase their rate of spending to a measurable degree – after all, there are just not that many of them in the first place. Does it lead to job creation? That would be a dubious claim. Businesses thrive on demand, which comes primarily from the vast majority, rather than the wealthy minority. If demand is below threshold, a given business will shrink or fail. Facilitating demand is the only way to stimulate the growth of business, risk-takers take risks when the prospects for a market look good, not when demand looks potentially shaky. When you put more money in the hands of those who already have a lot, they look for ways to put it to use. Starting a business is difficult and dangerous (most new businesses fail within a very few years), it is much easier to let a broker or fund manager put the money into the market. Thus, tax cuts look like they improve the economy by putting more money into the market, making the indices rise, but ultimately, most of that money seems to get trapped there, shuffling around amongst the players, sometimes vanishing entirely, rarely actually making it to the part of the economy that actually does things other than shuffle money around. And it has been noted that deregulation is one major tenet of supply side economics. Combining that (e.g., Gramm-Leach-Bliley) with the investment effect of tax cuts, we can see that putting a lot of money into the market with less regulation might lead to severe economic consequences (like, say, the crash of '07/'08). Supply side economics as we have seen it touted looks like kindergarten math, an interesting premise that it way to stripped down to be very meaningful. Neo-liberal / libertarian economic ideas are paper-thin, once you nudge them with substantive inquiry, they tear and shred. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [March 15, 2015, 1:29am UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/62 "2015-03-15T01:29:47Z")
> [@jtgain](#): > > The simple, simple version of the supply side theory is as follows: > > Say we have a million dollars with which to grow the economy. If we give one million people $1 each (demand side), they might buy a small soda or whatnot and have near zero effect on the economy. > > If we give that $1 million to a person who starts a business, then that person can hire employees who can support a family. The person creates a product or service that benefits the community or alternatively, competes with others in the community, bringing the price down for that service. The business (and its employees) pay taxes to the federal, state, and local governments. The business improves an otherwise vacant structure and makes it more aesthetically pleasing. The original $1 million grows and adds value above the initial outlay. > > The demand side argument seems to be that increasing money in consumers hands will increase business and growing the economy that way. The problem with that is that it requires endless supplies of cash (from somewhere) to cause these consumer purchases to continue. A one time trillion dollar stimulus might be good for businesses because of the increased purchasing, but the business owner isn’t going to expand or hire new employees because he knows it is a one time surge. > > Again, this is simplistic, but money in the hands of business owners creates more wealth which then “trickles down” to others through employment. So your entire theory assumes that the person getting the money is going to start a successful business that employs lots of people. Your imagination is a bit lacking. He might Throw away the money Put it in the market to drive up stock prices Start a business, for instance selling dog food on-line, and use some of the money to buy expensive ads. When it goes bust the money is wasted. Start a business but do all his hiring in China. Not to mention that if the economy is awash in cash, like ours is, and no one wants to invest in his business, it is probably not a good one. Why do you think demand side is a one-time thing? If money from the rich is redistributed to those who will spend it, the demand is continuous, and there will be good reasons for business owners to hire. ---
**Author:** ![John\_Stamos\_Left\_Ear](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_stamos_left_ear/32/3198_2.png) [@John\_Stamos\_Left\_Ear](https://boards.straightdope.com/u/John_Stamos_Left_Ear)\ **Post date:** [March 15, 2015, 3:27am UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/63 "2015-03-15T03:27:48Z")
> [@puddleglum](#): > > Total population growth includes immigration which is driven more by cultural factors and geographic proximity. If you just use [internal migration](http://www.newgeography.com/content/003359-moving-north-dakota-the-new-census-estimates) then the data becomes more clear. If you take the top ten states for growth from internal migration and compare them with the top states for population lost from internal migration you can see a large movement of people from high tax states to low tax states. The [average total state tax burden per capita](http://en.wikipedia.org/wiki/State_tax_levels_in_the_United_States) for the ten states that have lost the most people to other states was $2,832. The average total tax burden per capita for the states that have gained the most people is $2,009. That is a difference of 40%. Did you not read the previous two times I pointed out that correlation is not causation? How about the three actual studies into causation which found that your hypothesis is incorrect? ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 16, 2015, 4:47pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/64 "2015-03-16T16:47:22Z")
> [@John\_Stamos\_Left\_Ear](#): > > Did you not read the previous two times I pointed out that correlation is not causation? > > How about the three actual studies into causation which found that your hypothesis is incorrect? The studies you mentioned are too crude in that they measure difference in emigration rates right before and after a tax change. The way tax changes work is slowly and cumulatively and thus much harder to measure. As the NY Times article mentioned, the most common reason for people to change states is a new job. No one would argue that taxes are not a part of the decision when a business decides to move its headquarters or open up a new plant somewhere. Even then it is a small part of the decision. But it still matters on the margin. So what happens is that because of few percent of businesses each year move or expand in low tax states each year a few percent of people move to follow those jobs. This compounds each year until decade by decade high tax states lose population and low tax states gain population. For example from 1990-2010 California lost 3.5 million people, while Florida gained 3.25 million people. It is the overall trend that is important not the year to year variation. ---
**Author:** ![John\_Stamos\_Left\_Ear](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_stamos_left_ear/32/3198_2.png) [@John\_Stamos\_Left\_Ear](https://boards.straightdope.com/u/John_Stamos_Left_Ear)\ **Post date:** [March 16, 2015, 5:16pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/65 "2015-03-16T17:16:46Z")
Correlation does not equal causation. For the fourth time. You have no evidence that taxes is the primary or even a main concern for population movement. ---
**Author:** ![John\_Stamos\_Left\_Ear](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_stamos_left_ear/32/3198_2.png) [@John\_Stamos\_Left\_Ear](https://boards.straightdope.com/u/John_Stamos_Left_Ear)\ **Post date:** [March 16, 2015, 5:22pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/66 "2015-03-16T17:22:11Z")
“In a study tracking 18 years of migration between states in New England, Thompson found that people mostly move for job-related reasons. They go where the jobs are, regardless of whether it’s low-tax New Hampshire or higher-tax Maine.” So 18 years is not long enough according to you? ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 17, 2015, 3:24pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/67 "2015-03-17T15:24:19Z")
> [@John\_Stamos\_Left\_Ear](#): > > “In a study tracking 18 years of migration between states in New England, Thompson found that people mostly move for job-related reasons. They go where the jobs are, regardless of whether it’s low-tax New Hampshire or higher-tax Maine.” > > So 18 years is not long enough according to you? Where do the jobs go? More go where taxes are low. Low tax New Hampshire has a population growth rate that is 54% higher than higher tax Maine. According to this [study (pdf)](http://www.taxpayersnetwork.org/_rainbow/documents/taxation%20and%20migration.pdf) For every percent that the marginal tax rate goes up and additional 18,000 people move out of that state per year. That amount of people moving can affect the amount of money taxes generate. [This study (pdf)](http://www.state.nj.us/treasury/economics/documents/gsef/OCE-Migration-Study.pdf) by the office of the chief economist of New Jersey estimated that the 2004 tax increase in New Jersey ultimately cost the state 2.5 billion in taxes collected. [Here](http://www.howmoneywalks.com/irs-tax-migration/)is an interactive map using IRS data to show how much wealth is moving between states and even counties. ---
**Author:** ![eschereal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eschereal/32/18939_2.png) [@eschereal](https://boards.straightdope.com/u/eschereal)\ **Post date:** [March 18, 2015, 4:31pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/68 "2015-03-18T16:31:04Z")
If wealthy persons, such as might be affected by top marginal rates and things like cap-gains move out of a state, does that mean they move their job-creating businesses as well? If their main goal is to relieve their own tax burden, they can move to a different state yet still operate a business in the state they moved out of. This is very incomplete information that looks to be tailored to present a specific result (as in, support an agenda). And, of course, the first pdf link above is suspect on the face of it, being sourced from “Taxpayers Network”. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [March 18, 2015, 7:20pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/69 "2015-03-18T19:20:30Z")
> [@jtgain](#): > > The simple, simple version of the supply side theory is as follows: > > Say we have a million dollars with which to grow the economy. If we give one million people $1 each (demand side), they might buy a small soda or whatnot and have near zero effect on the economy. > > If we give that $1 million to a person who starts a business, then that person can hire employees who can support a family. The person creates a product or service that benefits the community or alternatively, competes with others in the community, bringing the price down for that service. The business (and its employees) pay taxes to the federal, state, and local governments. The business improves an otherwise vacant structure and makes it more aesthetically pleasing. The original $1 million grows and adds value above the initial outlay. > > The demand side argument seems to be that increasing money in consumers hands will increase business and growing the economy that way. The problem with that is that it requires endless supplies of cash (from somewhere) to cause these consumer purchases to continue. A one time trillion dollar stimulus might be good for businesses because of the increased purchasing, but the business owner isn’t going to expand or hire new employees because he knows it is a one time surge. > > Again, this is simplistic, but money in the hands of business owners creates more wealth which then “trickles down” to others through employment. I think the problem is this treats dollars like they disappear at some point. The real basis of an economy is how the dollars are moving around. If you give somebody a million dollars and he puts it in his pocket, it creates no economic growth. That guy created economic growth by hiring people and giving them the million dollars he had. And all those people he gave money to turned around used that money to buy products. And the dollars they spent on products went back to the businesses that produced those products and the people who owned those businesses. It’s just a cycle. If you had instead divided the million dollars up and given it to a bunch of different people, the money would have just entered the cycle at a different point. The dollars that got spent on buying sodas would have ended up with the people who own soda-making companies. And they would have given it to the people who work for them making soda and so on. ---
**Author:** ![John\_Stamos\_Left\_Ear](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_stamos_left_ear/32/3198_2.png) [@John\_Stamos\_Left\_Ear](https://boards.straightdope.com/u/John_Stamos_Left_Ear)\ **Post date:** [March 18, 2015, 8:16pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/70 "2015-03-18T20:16:56Z")
Also a lot of people move specifically to places with higher taxes. Not because they love paying taxes but because they need or want the services that their taxes pay for. Many people want to live near public transportation, or better schools. Those things are directly funded through taxes. I’m an anecdote, but I did this when I went to a city with considerably higher property taxes than the metropolis it is adjacent to because we have a special needs son and there were schools and other resources (that we pay for through those taxes) that have been indispensable. Anyone who ever choose one area to live in over another using better schools as a criteria (which covers most if not all parents) are usually making a decision to pay more taxes. This may be a shock to some people but some people like services and are cognizant that they don’t come for free. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 19, 2015, 4:50pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/71 "2015-03-19T16:50:12Z")
> [@The\_Joker\_and\_the\_Thief](#): > > Because regulation is a ban on a type of mutually beneficial transaction, and its been well established that more trade generally leads to better outcomes. Now, regulation is often enacted to prevent negative externalities or market failures, so it’s certainly possible for regulation to improve outcomes. But I don’t have enough faith in the competence of government to believe that the regulation we have right now is perfect, and thus it is possible for deregulation to be economically beneficial. And it is also possible for more regulation to be economically beneficial? ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 19, 2015, 5:30pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/72 "2015-03-19T17:30:24Z")
> [@puddleglum](#): > > There is no one who believes in trickle down economics. It is 100% a straw man. What supply side theory says is that government revenue is the same at a 100% tax rate as it is at a 0% rate. Every sane economist agrees with this. Supply side economics is a political rationale for lowering taxes (for everyone). It purported to be aimed at growing the economy by encouraging investment through lower taxes rather than consumption through more government spending. What ended up happening was that we ended up borrowing from taxpayers the money that we would have previously taxed them, government spent the same amount but instead of financing their spending by taxing taxpayers it financed the government by borrowing from them. Back in the 1970’s 1980’s the general practice was to pay for things as you went. If you wanted to increase spending, you had to increase taxes (hence the tag “tax and spend Democrats”) and if you wanted to lower taxes, you had to cut spending to account for the lost revenue. Reagan wanted to promise lower taxes without telling people that they would have to give up any government services so he convinced people 9and they wanted to be convinced) that they could eat their cake and have it too. That we could cut taxes without cutting services because the tax cuts would grow the economy enough to make up for the lower rates. Of course this was bullshit and what we ended up with were the largest peace time budget deficits in history. > [@](#): > > This insight forms the basis of neo-liberalism, which states that lower taxes are better for an economy all other things being equal. Neo-liberalism has worked everywhere it has been tried. cite? > [@](#): > > Kansas is a bad test for supply side economics. Because it doesn’t support the theory of supply side economics? > [@](#): > > South Dakota would be a better test. It has no state income tax, no personal property tax, no inventory tax, and no inheritance tax. It is ranked second in the business friendliness of their tax. The results are an unemployment rate of 3.0% which is 5.2% lower than the national average. That’s like saying that Norway is a good test case for the economic effects of far left socialism or that Saudi Arabia is a good test case for the economic effects of monarchy. The fact that you discovered OIL in South Dakota eclipses every other fucking thing that could be affecting the numbers. > [@](#): > > Secondly, Piketty claims that all the cutting of taxes has meant more power to the wealthy. Twenty five years ago the top federal tax rate in the nation was 28%, the top 1% of income earners paid 25.13% of total income tax paid, and the bottom 50% of earners paid 17.17% of total income tax. There were exactly 3 years since the great depression when tax rates were that low 1988 1989 and 1990 when Ronald Reagan dropped the top marginal tax rate from 38.5 to 28. Am I the only one that remembers the recession of the early 1990’s? Dropping the top marginal tax rate by about a fourth didn’t seem to do much to prevent that recession. > [@](#): > > Now the top rate is 39.6%, and increase of 41%. The top 1% of earners pays 37% of total income tax and the bottom 50% pays 2.36% of total income taxes. The federal income tax has gotten significantly more progressive, so unless what the rich really want is to pay alot more of the income tax burden, Picketty is dead wrong. If we only look at the lowest least progressive income tax rates since 1931 and compare them to today, then yes, they have gotten more progressive. Mostly because we seem to have largely relieved the lower income earners from the income tax burden or given them Friedmanesque minimum income through the EITC. > [@](#): > > I don’t know how he reckons “true figures” about growth. But if he used GDP growth like the rest of us, he would find that US GDP has grown 160% in the last 25 years, the UK’s GDP has grown 141%, France’s GDP has grown 122%, Sweden’s has grown 120%, Germany’s has grown 110%, and Japan’s has grown 89%. I would say that 160% growth is more rapid than 89%. This is even more impressive when you consider that the US had a much higher starting place so catch up growth models would predict slower growth for the US, all else being equal. Japan has generally had lower tax burdens than we have. And Germany with a higher tax burden (at least for individuals) was doing better than us until they absorbed East Germany and their GDP growth stalled. Sure, all things being equal, lower taxes are good as long as we can afford to pay for government. Then we have to talk about WHO pays the taxes. It is clear that high marginal tax rates, even EXTREMELY high marginal tax rates do not always grind economic activity to a halt (see 1945 to 1980). I think Reagan’s original argument for tax reduction made sense when we reduced top marginal tax rates to 50% but the argument becomes more political (and a matter of conjecture and opinion) and less economic after that. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 19, 2015, 5:39pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/73 "2015-03-19T17:39:43Z")
> [@ITR\_champion](#): > > Funny thing is, if look at which states are gaining people and which are losing people, it seems that people are fleeing from high-tax, high-regulation states like Illinois and Connecticut and heading towards low-tax, low-regulation states like Texas, Florida, and Nevada. It’s almost as if people like being allowed to keep more of their own money and being allowed to choose what to do with it. People go where the jobs are. In some cases those jobs are driven by oil, in other cases its driven by states undercutting other states on taxes and regulation. Tax competition between nations is a race to the bottom. Tax competition between states is cannibalism. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 19, 2015, 5:51pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/74 "2015-03-19T17:51:08Z")
> [@jtgain](#): > > The simple, simple version of the supply side theory is as follows: > > Say we have a million dollars with which to grow the economy. If we give one million people $1 each (demand side), they might buy a small soda or whatnot and have near zero effect on the economy. Unless you sell sodas. Then its got a million dollar effect and you buy more soda machines and hire more soda workers and those soda workers buy more refrigerators and the refrigerator companies hire more people and buy more refrigerator making machines, etc. > [@](#): > > If we give that $1 million to a person who starts a business, then that person can hire employees who can support a family. The person creates a product or service that benefits the community or alternatively, competes with others in the community, bringing the price down for that service. The business (and its employees) pay taxes to the federal, state, and local governments. The business improves an otherwise vacant structure and makes it more aesthetically pleasing. The original $1 million grows and adds value above the initial outlay. Reducing tax rates doesn’t give people money, it increases after tax profits. This higher after tax return might justify more risk taking and as a whole would increase economic activity. But so does buying soda. > [@](#): > > The demand side argument seems to be that increasing money in consumers hands will increase business and growing the economy that way. The problem with that is that it requires endless supplies of cash (from somewhere) to cause these consumer purchases to continue. A one time trillion dollar stimulus might be good for businesses because of the increased purchasing, but the business owner isn’t going to expand or hire new employees because he knows it is a one time surge. Are you under the impression that a one time tax windfall does much more than make wealthy people buy treasury bonds with the money? > [@](#): > > Again, this is simplistic, but money in the hands of business owners creates more wealth which then “trickles down” to others through employment. Nope. Money in the hands of business owners creates wealthy business owners. I don’t know any business owner that will increase their business size simply because they suddenly have money burning a hole in their pocket. The demand has to be there in some form for a businessman to be able to make a business case for increasing their business… ---
**Author:** ![puddleglum](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/puddleglum/32/137_2.png) [@puddleglum](https://boards.straightdope.com/u/puddleglum)\ **Post date:** [March 19, 2015, 5:55pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/75 "2015-03-19T17:55:56Z")
> [@Damuri\_Ajashi](#): > > Supply side economics is a political rationale for lowering taxes (for everyone). It purported to be aimed at growing the economy by encouraging investment through lower taxes rather than consumption through more government spending. What ended up happening was that we ended up borrowing from taxpayers the money that we would have previously taxed them, government spent the same amount but instead of financing their spending by taxing taxpayers it financed the government by borrowing from them. > > Back in the 1970’s 1980’s the general practice was to pay for things as you went. If you wanted to increase spending, you had to increase taxes (hence the tag “tax and spend Democrats”) and if you wanted to lower taxes, you had to cut spending to account for the lost revenue. Reagan wanted to promise lower taxes without telling people that they would have to give up any government services so he convinced people 9and they wanted to be convinced) that they could eat their cake and have it too. That we could cut taxes without cutting services because the tax cuts would grow the economy enough to make up for the lower rates. Of course this was bullshit and what we ended up with were the largest peace time budget deficits in history. > > cite? > > Because it doesn’t support the theory of supply side economics? > > That’s like saying that Norway is a good test case for the economic effects of far left socialism or that Saudi Arabia is a good test case for the economic effects of monarchy. The fact that you discovered OIL in South Dakota eclipses every other fucking thing that could be affecting the numbers. > > There were exactly 3 years since the great depression when tax rates were that low 1988 1989 and 1990 when Ronald Reagan dropped the top marginal tax rate from 38.5 to 28. Am I the only one that remembers the recession of the early 1990’s? Dropping the top marginal tax rate by about a fourth didn’t seem to do much to prevent that recession. > > If we only look at the lowest least progressive income tax rates since 1931 and compare them to today, then yes, they have gotten more progressive. Mostly because we seem to have largely relieved the lower income earners from the income tax burden or given them Friedmanesque minimum income through the EITC. > > Japan has generally had lower tax burdens than we have. And Germany with a higher tax burden (at least for individuals) was doing better than us until they absorbed East Germany and their GDP growth stalled. > > Sure, all things being equal, lower taxes are good as long as we can afford to pay for government. Then we have to talk about WHO pays the taxes. It is clear that high marginal tax rates, even EXTREMELY high marginal tax rates do not always grind economic activity to a halt (see 1945 to 1980). I think Reagan’s original argument for tax reduction made sense when we reduced top marginal tax rates to 50% but the argument becomes more political (and a matter of conjecture and opinion) and less economic after that. [Cite](http://www.econlib.org/library/Columns/y2010/Sumnerneoliberalism.html)about the success of neoliberalism. Kansas is a bad test case because Kansas’ taxes are not particularly low and relative to the rest of the country got higher during the time period. North Dakota has all the oil. South Dakota has very little oil, very low taxes and is thriving. I was intentionally using tax burden, not tax rates, because while tax rates have moved around, the tax burden has been shifting more and more toward the wealthy disproving Piketty. As you say at the same time benefits such as EITC for the poor have grown. No one claims that high tax taxes grind economic activity to a halt, but they slow growth rates on the margin and over time that difference is huge. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 19, 2015, 7:49pm UTC](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670/76 "2015-03-19T19:49:11Z")
> [@puddleglum](#): > > [Cite](http://www.econlib.org/library/Columns/y2010/Sumnerneoliberalism.html)about the success of neoliberalism. > Kansas is a bad test case because Kansas’ taxes are not particularly low and relative to the rest of the country got higher during the time period. > North Dakota has all the oil. South Dakota has very little oil, very low taxes and is thriving. > I was intentionally using tax burden, not tax rates, because while tax rates have moved around, the tax burden has been shifting more and more toward the wealthy disproving Piketty. As you say at the same time benefits such as EITC for the poor have grown. > No one claims that high tax taxes grind economic activity to a halt, but they slow growth rates on the margin and over time that difference is huge. I don’t find a cite that relies on marginal gains by Britain and large increases by city-states like Hong Kong and Singapore and an third world nation like Chile makes a compelling case for the success of neo-liberalism. I also don’t think neoliberalism is supply side economics. Like I said, supply side economics were largely a political rationale used to lower taxes without the pain of lowering spending at the cost of huge deficits. Good point about South Dakota not being the same as North Dakota.:smack: The thing about economics is that it is hard to really correct for confounding factors but I agree that generally freer markets tend to produce better results but only up to a point. I think we all agree that laissez faire policies are not optimal either. [Previous page](https://boards.straightdope.com/t/lets-talk-about-supply-side-economics/713670.md?page=3)