The debate over whether or not to extend the Bush tax cuts raises an interesting question in my mind. I wonder if a better timed and infrastructure-focused stimulus would have helped to avoid this debate?
Applying a conservative multiplier of 2.5, approximately $2.5 trillion dollars of economic growth should have been generated since the stimulus was signed into law in February 2009. Without increasing the tax rate, additional tax revenues could have been generated without having to let the Bush tax cuts expire.
Unfortunately the politics of no from the right and the politics of corporation bashing and disingenuousness from the left have left little room for being rational and focused on optimal taxation solutions.