Aurel, you're WAY OFF on a tangent. (intentionally, I imagine)
Quote:
Originally posted by beepbeep
. . .
So what's the point in lowering taxes when your goverment already is low on cash?
I mean, you can lover your taxes to make people happy in the short turn but then it means that goverment either has to borrow money abroad to cover it's expenses . . .
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You seem to be confusing "lowering taxes" with "lowering taxe
rate." (a VERY important distinction)
What I remember from econ 101, is this thing called "velocity of money."
(def'n)
Essentially, gov'ts take (recieve) their cut (money)
only at the point of transaction. (fewer transactions = few $'s)
On a given purchase; When the overhead of tax is too high, the number of (reported) transactions drops. Thus, it is in the gov'ts interest to find the "sweet-spot" between tax-
rate and taxable spending.
Goran, take for example how Sweden controls alcohol sales by using punitively high taxes. It slows the sales (and taxes).
. . . or, in more extreme cases, it sends the sales underground; as it has for your Nordic neighbors to the west. (almost eliminating those taxes .. .even though the rate is high)