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Michael Boskin On When a Tax Cut Isn't Actually A Tax Cut


Published: September 5, 2018

The only real tax reform is permanent spending control because any dollar borrowed has to be paid back with tax revenue. Cutting taxes without cutting spending means that tax revenue will have to be correspondingly higher in the future. Borrowing today implies future taxation.

This video’s audio is excerpted from Michael Boskin’s 2017 Hoover Institution Summer Policy Boot Camp lecture. 

The Hoover Institution’s Summer Policy Boot Camp an intensive, one-week residential immersion program in the essentials of today’s national and international United States policy for upperclassmen and recent graduates. To learn more, click here.

Additional Resources

  • Read Michael Boskin’s chapter “A Blueprint for Tax Reform” in Blueprint for America here.
  • Watch as Michael Boskin answers the most common questions viewers have about tax reform in his “Office Hours” video, available here.
  • Read “How to Think About Taxes” in the Hoover Digest, available here.
  • For more on marginal tax rates from Michael Boskin, click here.
View Transcript

If the government borrows a dollar today it’s committing itself to paying interest payments into the future and the present discount of value of those interest payments equals that dollar. 

So, unless spending is altered, borrowing today is just implying future taxation. 

That makes for the most fundamental point I can make today. Because borrowing implies future taxes, the only real tax reform that is permanent is spending control.