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Strategies & Market Trends : Steve's Channelling Thread -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (7198)	11/5/2000 4:39:54 AM
From: Steve Lee	Read Replies (3) \| Respond to of 30051

Zeev and Sam, Without a thorough economic grounding, I don't understand the correlation between tax cuts and higher rates. Also, is it not possible that a lower rate of tax can have the effect of increasing output which more than outweighs the lower rates bringing higher or equivalent total tax revenues. EG, If my tax rate went up to 98% as has been the top rate of tax where I live previously, I would make sure I have no earnings in this country. And then my country would have to go begging to the IMF like it did last time taxes were ludicrously high. BTW, at that time, inflation was pretty high too. (I was not observing at the time so can only rely on the little I have read about that part of history).

To: Sam who wrote (7198)	11/6/2000 12:45:07 AM
From: Dave B	Respond to of 30051

Sam, Bush's tax cuts will not only cause both government cutbacks and deficits, but also higher rates. Whatever is gained by his cuts will be lost--or more than lost--by interest rates being higher than they would otherwise be. Why would it cause deficits and higher interest rates if the government takes less money from its citizens (and cuts their spending appropriately)? Don't the citizens have a right to keep their money? What do you think the government does with the money it takes that is more "worthy" than whatever the people who earned the money would do with it? Is the government the most "efficient" spender of this money? If it's the case that we'll have more prosperity because the government takes more money from its citizens, then maybe we should just raise the tax rates to 100%! Then we'd have the maximum possible prosperity <G>. Dave