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Strategies & Market Trends : MDA - Market Direction Analysis

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Jan 12 4:00 PM EST

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To: Zeev Hed who wrote (76745)	5/10/2001 11:29:01 AM
From: ahhaha	Read Replies (1) of 99985

Why not let individuals decide what they will do with tax cuts instead of directing them? You seem to think that cutting taxes means to add capacity. Why would an individual like a company do that if they had plenty of capacity? They wouldn't. They'd use the tax not taken to add to efficiency of the capacity they had in place. What you suggest, directing tax money to final demand, marginalizes the incentive for producers to increase efficiency. The result is that the cost to produce the marginal unit does not fall so that an increase in final demand leads to a rise in prices or declining profits.

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