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Lower Taxes and Economic Growth: Response to a Flawed Analysis

Bookmark and Share Report Misuse or Glitches

Publication Date: June 2007

Publisher(s): Tax Policy Center

Author(s): Kim Rueben; Iris Lav

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Banking and finance (Taxation and tax policy)

Keywords: Tax Policy; Economic Stimulus; State and Local Issues; Fiscal future

Type: Report

Abstract:

When the Speaker and other leaders of Florida's House of Representatives released their plan to roll back property taxes and place a tight growth limit on state and local revenues, they included a report in their release by the firm Arduin, Laffer and Moore that claims lower taxes will lead to higher economic growth. We examine and point out the flaws in this analysis and show the authors' fundamental result is due to how they constructed their data and an elementary statistical mistake.