Since World War II, despite 30 major changes in the tax code, federal revenue as a percentage of GDP has hardly ever budged from just under 19 percent -- that's all the government can raise, period:
Why? Higher taxes discourage the "animal spirits" of entrepreneurship. When tax rates are raised, taxpayers are encouraged to shift, hide and underreport income. Taxpayers divert their effort from pro-growth productive investments to seeking tax shelters, tax havens and tax exempt investments. This behavior tends to dampen economic growth and job creation. Lower taxes increase the incentives to work, produce, save and invest, thereby encouraging capital formation and jobs. Taxpayers have less incentive to shelter and shift income.
That means that the president's Providing Cover for the Gutless Cowards Commission National Commission on Fiscal Responsibility and Reform, in suggesting we eventually get spending down to 21 percent of GDP, is actually committed to deficit spending and big governdment forever. Debating the specifics of each commission proposal on
Comments
Leo:
Ain't THAT the truth!
Great explanation (even the "crossed-out" parts)
;)
Have a great week.
What you seem to be saying is that when taxes go up, rich people cheat more. I'm pretty sure you're right.
It might be politically impossible, but I'd rather not use that as an excuse to cut taxes on the rich, but rather as a reason to make it harder to cheat.
Your source, which you did not identify, is Reason magazine, a far-right libertarian publication.
It is simply a fact that the highest budget deficits in modern times were under tax-cutting Republican presidents Reagan and George W. Bush. Clinton gave us, briefly, a surplus.
What really puzzles me is why so many members of the far right, especially the Tea Partiers, want so much to help the rich. They don't seem to understand they are voting against their own self-interest. After all, our current recession is the Bush recession, not the Obama recession.
I'm disappointed in Obama and certainly no cheerleader for him, but he's not the one who busted the budget.
Reagan and Bush Jr. both cut taxes for the rich, as you apparently endorse. In both cases the deficit set records and the economy imploded. How many times do we have to try the trickle-down theory for you to concede it doesn't work?