When lowering taxes brings more revenue into the treasury, why do some people insist that raising taxes is the solution to solving the government's revenue needs?
2007-09-02 15:04:15 · 4 answers · asked by BarbarianKing 1 in Business & Finance ➔ Taxes ➔ United States
Some people still use a static analysis for revenue estimations which even the JCT (Joint Committee on Taxation) has determined to be flawed and short sighted. Those who want to raise taxes are hoping that the general public has no concept of dynamic revenue estimating. What is the difference? Static scoring ignores human nature and revenue feedback. A simplified example is like saying we sold 1000 cars at $10,000 last year and made $10,000,000, if we raise the price to $20,000, we will make $20,000,000. Dynamic analysis stops to ask the question, how many will buy a $10,000 car at $20,000?
SEE: How to Measure the Revenue Impact of Changes in Tax Rates
by Daniel J. Mitchell, Ph.D. http://www.heritage.org/Research/Taxes/BG1090.cfm
Backgrounder #1090 August 9, 1996
How Faulty Official Figures Greatly Overstate the Cost of the Bush Tax Plan
by William W. Beach, Daniel J. Mitchell, and D. Mark Wilson
Backgrounder #1416 March 6, 2001 http://www.heritage.org/Research/Taxes/BG1416.cfm
The longer capital works in the private sector before being taxed, the greater the revenue feedback.
This is a very good reason to have the FairTax Act www.fairtax.org
2007-09-02 15:24:34 · answer #1 · answered by Anonymous · 0⤊ 1⤋
It depends on what side of the Laffer Curve that we are on. If we are on the front side, increasing taxes will increase revenue. This happened in the early 90s. If we are on the backside, a tax increase will decrease revenue.
Keep in mind that, relative to the rest of the world, taxes in the US are very low. Some future President and a future Congress will have to increase taxes. The question is: Do we raise them a little in the near future or a lot down the road?
2007-09-02 23:27:05 · answer #2 · answered by Wayne Z 7 · 0⤊ 0⤋
There is a point where the pendulum swings the other way otherwise revenue would be at its highest if taxes were zero. Somewhere there is a balance between tax rates and revenue collected.
2007-09-02 22:30:25 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Because the gov't is full of **** and most people are very uninformed. Read The Fair Tax Book by Neal Bortz and John Linder
2007-09-06 21:42:25 · answer #4 · answered by I luv libs 1 · 0⤊ 0⤋