TIMOTHY NOAH JANUARY 31, 2012
Take a look at the following statement:
"Permanently raising the federal tax rate by one percentage point for those in the top income tax bracket would increase federal tax revenue over the next 10 years."
This is a bit like saying if you jump into a swimming pool you'll get wet. When researchers at the University of Chicago's Booth School of Business and Northwestern's Kellogg School of Management presented this statement to a "panel of distinguished economists," 100 percent of them agreed with it. But when the researchers presented this statement to the general public only 66 percent of respondents agreed with it. Only fifty percent of Republicans agreed with it, compared to 80 percent of Democrats. "This difference exists in spite of the fact that this statement is factual, not political," the researchers observed. "Indeed, all economists, regardless of their political orientation, agree with it." Well, all economists except for Arthur Laffer, keeper of the supply-side flame.
Why does the public resist believing a statement that is factually true? Because Republican candidates keep insisting it isn't true. "Studies of the American tax system have demonstrated that higher corporate rates do not necessarily lead to higher revenues," we learn from "Believe in America," Mitt Romney's economic plan. "When we cut the capital gains tax in the 90s," Newt Gingrich told CBS News, "the revenue went up dramatically." This is a fantasy that was long-ago disproven. Not even Romney economics adviser Greg Mankiw believes it. My predecessor in this space, Jonathan Chait, wrote a whole book about this.
Other interesting cleavages between economists and the public:
"Very few investors, if any, can consistently make accurate predictions about whether the price of an individual stock will rise or fall on a given day." Sixty-four percent of economists believe this, compared to 54 percent of the general public. Wealthier and/or more highly educated respondents are more likely to agree with the economists.
“Eliminating tax deductions on mortgages would lead to better financing by individuals.” Eighty-five percent of economists believe this, as against 35 percent of the public. Wealthier respondents are less likely to agree with the economists; poorer respondents are more likely to agree with the economists.
“Mandates that Federal government purchases should be ‘buy American’ have a significant positive impact on U.S. manufacturing employment.” Ten percent of economists believe this; 75 percent of the public does.