Nobel Laureate: Bush was right, but tax cuts were too small

[Drbio]

Nobel laureate calls for steeper tax cuts in US

Mon Oct 11, 5:21 PM ET

WASHINGTON (AFP) - Edward Prescott, who picked up the Nobel Prize for Economics, said President George W. Bush (news - web sites)'s tax rate cuts were "pretty small" and should have been bigger.

"What Bush has done has been not very big, it's pretty small," Prescott told CNBC financial news television.

"Tax rates were not cut enough," he said.

Lower tax rates provided an incentive to work, Prescott said. Prescott and Norwegian Finn Kydland won the 2004 Nobel Economics Prize for research into the forces behind business cycles.


The American analyst, who is a professor at Arizona State University and a researcher at the Federal Reserve (news - web sites) Bank of Minneapolis, said a large tax cut in 1986 had lowered rates while collecting the same revenue. But "in the early '90s the economy was depressed by the tax increase in '93 by about four percent, and it's right at that level now," Prescott said.

Bush, who is fighting to get re-elected November 2, has cut taxes by about 1.7 trillion dollars during his term. The US leader accuses his Democratic rival John Kerry (news - web sites) of favoring tax increases, despite Kerry's promise to cut taxes for everyone earning less than 200,000 dollars a year.