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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (13950)	9/24/2003 9:45:19 PM
From: gpowell	Read Replies (1) \| Respond to of 306849

You're neglecting to consider intertemporal effects. If the government reduces taxes today without changing its expenditures, it borrows today and will raise taxes tomorrow. For the private sector, this means more net-of-tax income today and less tomorrow. As long as the public and private sectors borrow and lend at the same rate, these intertemporal shifts are equivalent and the public borrowing can be matched one for one by private saving. The government´s spending and taxing activities reduce private wealth. Given government purchases, the precise scheduling of taxes does not matter.