Quote:
Originally posted by Peaches@Feb 4 2003, 09:25 AM
Simply stated, every time there is a major tax cut revenues to the government increase. The reason is simple.
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But, it's NOT that simple.
The GDP expands in most years and recessions are usually small and quick. How can one measure the effects of one's policies on the GDP against a backdrop of annual increases? Pick any starting point and it will be higher at some later date.
I think tax cuts sometimes increase government revenues and sometimes do not. If you take the extreme cases, a 0% tax rate and a 100% tax rate this will be obvious. With a 0% tax rate, the GDP will expand but no income will be collected. With a 100% tax rate, there would be no incentives to run a business.
The optimal tax rate must be in the middle somewhere then. At any given point, one does know whether that point is up or down.