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Politics : Formerly About Advanced Micro Devices
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To: combjelly who wrote (372215)2/28/2008 12:05:42 PM
From: TimF  Read Replies (1) of 1577666
 
You made the statement "Cutting taxes decreases the dead weight loss of compliance costs, and avoidance costs/distortions.". There is no evidence that this makes any significant difference at all.

There is tons of evidence. Its beyond a consensus view in economics, its near universal. Of course the consensus view isn't always correct, but it doesn't amount to some random guess. In this case its as close to beyond a doubt as just about anything in economics. You don't even have to be an economist or educated in economics to see how obvious it is. If you impose taxes they affect people's behavior as people try to reduce the amount of taxes they are liable for. Also any tax code as complex as ours is going to take time, money, and effort to calculate and comply with. Think all those accountants, tax lawyers, and tax preparers work for free? Do you think that taxes don't effect business and investment decisions, and at the margin the decisions of workers? Please. In the past you haven't shown any signs of being that dense.

However, the observation can be made that high tax states tend to be wealthier than low tax states.

But the observation doesn't show the direction of the causation (if there is causation at all and not just non casual correlation). If a state is wealthier it can afford higher tax rates. If the state has advantages in terms of built up capital, education, location, network effects, etc. than the government can extract more without ruining the competitiveness of the local economy.
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