On 5 May 2005 07:38:27 -0700, rick++
Quoted message said:The Washington Post mentions tax receipts were $54 billion
ahead of projections for this year. I noticed this when
checking the national debt at
http://www.publicdebt.treas.gov/opd/opdpenny.htm
which seemed to be declining.
Some people suggest his is due to the run up in the stock
market the past couple years. Other suggest it is a
"Laffer curve" paradox. That is, there is a "sweet spot"
in tax collection, that when you lower rates people spend
less time evading taxes and more is received.
Progressive tax rates cause the government to continue to get an
increasing percentage of income as incomes rise, therefore, reducing
percentage of money for individuals to spend, save, invest, etc.
A tax break at that point gives people more money to spend or invest.
The people receiving the money or investment have more money to spend,
invest, or expand, and so on. So even though the tax percentage is
reduced, money changes hands and is taxed more often. Therefore, the
government can actually increase total tax intake by reducing income tax
rate somewhat.
Some people don't have a grasp on that and think that the only way for the
government to get more money is to raise taxes. But then that money just
goes to friends of the polititions instead of circulating more broadly
around the system getting taxed repeatedly.