A Strategy for Growth

As the U.S. economy languishes at the start of an election year, leaders in both political parties are proposing tax relief as a remedy. Ill-conceived tax cuts, however, would do nothing to help the economy and would further increase the federal deficit. Fortunately, there is a better way. By selectively reducing taxes on capital and labor, we can stimulate the economy and reduce the deficit at the same time. This pro-growth strategy focuses on three types of tax measures.

Capital, Taxes and Growth

This report is based on the neoclassical economic theory of capital, adopted by most of the leading capital theory economists of the 20th century. The theory is consistent with the last 37 years of empirical evidence and the observations of economists extending back into the 19th century. Among the report's most important conclusions – supported by both theory and evidence is that the aftertax rate of return on capital tends to be constant: