[fintstone]

Originally posted by beepbeep

As far as I understand, story's morale is "do not whine beacuse tax reductions help rich the most beacuse they pay most of the bill". But you do have budget deficit don't you? (Seems so: http://www.gao.gov/cghome/fiscalimbalance/imbalance4604/img10.html ) 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 (which lowers currency's value towards other currencys) or to cut it's expenses which means that ordinary citizen will have to pay himself for certain services, negating the gains from tax-reduction.

Good post! No, the moral of the story is that if you tax the rich too much, they will eventually choose to use their riches in such a way that you cannot tax them. The "rich" already pay an overwhelming amount of taxes. If you are too greedy and keep voting yourself more and more of the money they earn, eventually they will find that it is not worth the effort to earn more or will take their jobs and money elsewhere and you will have even less than before.

The reason for lowering taxes is that it has historically increased tax revenues significantly. If you assume a net sum game as your post...ie there are a finite, set number of tax dollars out there and a set amount of decrease in tax results in the same amount of increase in defict, you are correct. But, that is not how it seems to work. Every time this country has lowered taxes, this has resulted...under Kennedy, under Reagan, and now under Bush, in higher tax revenues due to increased personal and business spending and productivity. Under a smaller tax burden, our extremely capitalistic nature seems to take over. More tax paying jobs are created and as thus more taxes are collected. Unfortunately, as you imply, each time we take in more money, the political will is not there and we spend even more. Taxes are like a fine for speeding. If speeding 25 mph over the limit will get you a $25 fine..most might well be willing to speed and pay the price. If it were $100, fewer would take the risk. If it were $100,000 even fewer, $1,000,000 maybe no one..etc....If one depended on revenue from speed control, they would be wise to keep the fine a bit lower and hope more people would speed. If 1 million would speed with a $25 fine...your revenues are $25, 000,000..if only 5 would speed at a million dollar fine...then you have increased the fine greatly, but reduced the total revenue significantly. Since most of the "rich" in the US are that way because they earn it nad take risks..penalizing earnings too much results in less folks willing to do what it takes to achieve those earnings.