The problem with the GOP & tax cuts

In the on-going debate about the future of the American economy, Republicans have articulated a single, clear response: It’s tax-cuts that will show us the way.

Fair enough. But it’s also fair to ask pointed questions about the relevance of a tax-cutting agenda in the current economic climate.

1. Are taxes really high enough to stifle economic activity? Put another way, are there small businesses and entrepreneurs (or executives at major corporations) who are delaying expansion and job creation because their tax hit is too high?

I’m skeptical. During the 50s and 60s, American tax rates were far higher — and wealth-creation soared.

2. Are investors holding their money out of the stock market because capital gains taxes are punitive?

Again, that seems like a stretch to me. Here’s conservative David Frum‘s take:

[Republicans] are offering a clapped-out package of 1980s-vintage solutions, including capital gains tax cuts. Capital gains! Who has any capital gains to be taxed in the first place?

3. As a political strategy: Are there enough independent and “undecided” Americans out there whose primary concern is the income tax rate that this message will boost the GOP’s electoral chances?

I’m doubtful.

Maybe I’m wrong. Maybe Republicans can ride back to the a majority on the same old tax-cut mantra, but Frum doesn’t seem to think so.

“If we’re to make progress in 2010, we have to look serious,” he wrote. “This week we looked not only irrelevant, but clueless and silly.”