can the govt lose money by imposing taxes?

Question

any thoughts? its for business math

Answer 1

Yes they can. Economics have a term they call "elasticity". Many factors may determine whether a tax is too high that it inhibits consomption or business, thus hurting state coffers. In this case taxpayers are highly sensitive

Answer 2

The short answer is yes. From a government viewpoint, business taxes are imperitive, Thats why there are so many of them. The trick though is to find a balance.

If I am a businessman and I'm using my own capital and efforts to make the business work, I "may" be happy to pay 30-35% company tax. But then add up all the taxes, payroll taxes, salary contributions, etc etc...if I find that I am in effect paying, say, more than 50% of my profit away in tax, then maybe I would close the business, sell the business, move offshore, reduce the size of the business.

So, its a balancing act, but yes, if taxes are too high then the govt can lose money.

Answer 3

Yes, yes, yes. All these other people have great things to say, but all it takes to realize this is a quick look at US history. Einstein once said "The hardest thing in the world to understand is the income tax". I don't believe he was speaking of the insanely idiotic tax code, but of the incorect logic that people use to defend the idea of taxing income.

Answer 4

It's been proven that it can. The most recent tax receipts are much higher than previous years after the much "hated" tax-cuts. During the Clinton years of record tax increases, receipts decreased every year.