To: Dayuhan who wrote (13459 ) 10/24/2003 10:52:26 PM From: Lazarus_Long Respond to The statement that “lowering taxes raises revenues” is patently ridiculous. It is true that in some circumstances a reduction in taxes could contribute to economic growth and therefore to an increase in revenues. The question is not whether there is some universal rule defining the relationship between revenue and taxation, but what is the appropriate level of government spending at any given point in time, and what tax structure is best suited to generate the revenues necessary to support that spending. The recent tax cut was, I think, justified, given the macroeconomic environment and the need to provide material and psychological support for a recovery that was, at the time, quite weak. It is arguable, though unpopular, that the skewing of the benefits of the cut toward the wealthy was legitimate: the wealthy are more inclined to invest their surplus income, and the stock markets did need a kick-start. (It could also be argued that skewing the cuts to benefit the working class would generate a larger marginal increase in consumer demand, but this is not the place for that argument). I also believe as a matter of principle that the cut should have been accompanied by proportional spending cuts, including cuts in the military budget, which could, I believe, be made at a substantial level without impairing the nation’s ability to defend itself. The tax cut will be one of many contributing factors in an economic recovery, and no one of those factors can be designated as “the cause” of increased revenues.
