Quote:
Originally Posted by jyl
"Effective tax rate" includes deductions.
I've read so many pieces on various sides of the supply side tax debate. I've seldom seen an issue where so much talk leads to so little clarity. Its like debating religion or philosophy.
So personally, I'm at a point where I say (1) if it is so clear that lowering tax rates either does, or does not, increase government tax revenue, then I expect to see it quite plainly in the data, and (2) rather than believing anyone else's characterization, I'm going to download the data and calculate, chart, and study it myself and reach my own conclusions.
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No it doesn't...many households, mine included, lump business enterprises with earned income from non-business (i.e. jobs) sources. My effective tax rate is not based on common household deductions, I can include other business related deductions that mask my non-business income profile...
http://www.streetauthority.com/terms/e/effective-tax-rate.asp
So, then, why, exactly, does total revenue grow? It is my belief that lowering high marginal tax rates on households (stimulus at a personal level...more discretionary income) and businesses (stimulus to invest, moving dollars from static investments) occasions growth.
Total tax revenue and GDP is must be linked.
Edit: Supe, I provided the links, which included all the Supply-side, demand-side, Keynesian banter.