David Effl
Mon, May-16-05, 05:20
On 5 May 2005 07:38:27 -0700, rick++ wrote:
> The Washington Post mentions tax receipts were $54 billion
> ahead of projections for this year. I noticed this when
> checking the national debt at
> http://www.publicdebt.treas.gov/opd/opdpenny.htm which
> seemed to be declining. Some people suggest his is due to
> the run up in the stock market the past couple years. Other
> suggest it is a "Laffer curve" paradox. That is, there is a
> "sweet spot" in tax collection, that when you lower rates
> people spend less time evading taxes and more is received.
Progressive tax rates cause the government to continue to get
an increasing percentage of income as incomes rise, therefore,
reducing percentage of money for individuals to spend, save,
invest, etc.
A tax break at that point gives people more money to spend
or invest. The people receiving the money or investment have
more money to spend, invest, or expand, and so on. So even
though the tax percentage is reduced, money changes hands
and is taxed more often. Therefore, the government can
actually increase total tax intake by reducing income tax
rate somewhat.
Some people don't have a grasp on that and think that the only
way for the government to get more money is to raise taxes.
But then that money just goes to friends of the polititions
instead of circulating more broadly around the system getting
taxed repeatedly.
> The Washington Post mentions tax receipts were $54 billion
> ahead of projections for this year. I noticed this when
> checking the national debt at
> http://www.publicdebt.treas.gov/opd/opdpenny.htm which
> seemed to be declining. Some people suggest his is due to
> the run up in the stock market the past couple years. Other
> suggest it is a "Laffer curve" paradox. That is, there is a
> "sweet spot" in tax collection, that when you lower rates
> people spend less time evading taxes and more is received.
Progressive tax rates cause the government to continue to get
an increasing percentage of income as incomes rise, therefore,
reducing percentage of money for individuals to spend, save,
invest, etc.
A tax break at that point gives people more money to spend
or invest. The people receiving the money or investment have
more money to spend, invest, or expand, and so on. So even
though the tax percentage is reduced, money changes hands
and is taxed more often. Therefore, the government can
actually increase total tax intake by reducing income tax
rate somewhat.
Some people don't have a grasp on that and think that the only
way for the government to get more money is to raise taxes.
But then that money just goes to friends of the polititions
instead of circulating more broadly around the system getting
taxed repeatedly.