ABSTRACT
Promoting economic growth has long been a byword of public policy-makers of all ideologies and party affiliations. A cynical observer may be forgiven for viewing policymakers’ self-proclaimed dedication to economic growth as mere rhetoric masking undeviating pursuit of their own agendas. The barrier to growth imposed by taxes stems from their raising the relative cost of growth-generating activities. Focusing on how public policies affect the costs of growth-generating activities provides the basis for a progrowth tax strategy. The objective to be pursued by using this strategy is not to promote jobs, saving, capital formation, or any other specific growth-generating activity. Neutral tax treatment of saving implies that the tax does not change the opportunity cost of obtaining the additional income that saving provides relative to the cost of consumption. A significant part of the tax-induced escalation of the service price of capital is attributable to the multiple layers of tax imposed on the earnings of property.
