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Politics : Formerly About Advanced Micro Devices
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To: Taro who wrote (266473)12/29/2005 7:09:28 PM
From: TimF  Read Replies (1) of 1575256
 
Obviously, the very moment you cut the income tax from say 45% to 35% you lose tax revenues on the spot. Do the same calculation over a 4 year period and things start looking quite different.

Generally so. I wouldn't however claim it was a universal rule. Still if it 9 times out of 10, for that matter even if its 7 times out of 10, it would normally make sense to implement it.

Assuming that a lower tax rate always increases tax revenue, even in the long term isn't very reasonable. 45% to 35% might usually do it in the longer term and sometimes in the medium term (something like the 4 years you mention) but probably not in every single case, also "reducing tax rates" would include cutting from 2% to 1.9%. All else being equal that might produce more tax revenue in the very long term, but not by an amount that could easily be quantified, and probably not by any amount in the four year time frame that you talk about.

Tim
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