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[Shape Shifter]

Originally posted by Spanky
No it because high taxes start crowding out investment and hurt the economy. The less money people have the less money they have to invest and consume. The higher the corporate tax rate, the less money companies have to employ people or invest. High tax rates all over the world have been dropped because they hurt the economy.

There is no question that the lower the tax rates the better it is for the economy. However, you can't go too low because then you bleed the government and prevent it from providing for the infrastructure that is necessary for growth. With no government you get no growth.

However, above that level the issue is the more you tax now the more you lose in the future. The laffer curve states that when taxes reach a certain level they hurt growth so much that over the next few years revenues growth will dimish and a certain point they will actually cause revenues to diminsh over the next few years.

So over a five year period tax increase will actually lead to less revenue because of the loss in growth and a tax decrease will lead to more revenue because the growth will outweigh the

Just a small increase in the GNP dramatically increase tax revenue. So if a tax decrease brings in even a little rise in the GNP there is no question that such tax decrease will increase revenue.

The Supply Siders argue that the Reagan tax cuts provided the growth that led to balancing the budget in the Clinton administration. In other words we grew our way out of the deficit.

So to maximise government revenue you need to find the point where if you raise taxes you get diminshing marginal returns. That is the theory anyway.

There is no question the theory is sound, the issue is where is the maximum point on the curve. Conservatives think we are above it, and liberals generally think we are below it.

That is so Gay.