So, the big news out of Washington is that Obama has compromised with the Republicans. Tax cuts for everybody all the while extending unemployment benefits for some more amount of time.
The complain from the Left, and I admit that I’m impressed the Left cares about such nonsense, is that the tax cuts will add to the deficit.
But do they?
Maybe. But not by so much as “the experts” tell you.
WASHINGTON (MarketWatch) — Wall Street economists were tapping into their spreadsheets Tuesday, ready to ratchet up their economic growth forecasts for next year in light of the tax deal struck by President Barack Obama and congressional Republicans, particularly the surprise one-year reduction in payroll taxes.
What does this mean? Well, it means that now we all know taxes won’t go up, we can assume that the economy will perform better than it had. And THAT means GDP goes up more than it otherwise would.
When you tax a thing, you get less of that thing.
Years ago I was a big fan of the computer simulation game “Sim City 2000”. In this game, you are the mayor and the object is to bring in tax dollars. Game players soon realize that the “right” tax rate is crucial. Charging too much causes people and businesses to move out. Charge too little and you will not have enough money to provide the citizens important services.
the “right” tax rate is crucial. Charging too much causes people and businesses to move out. Charge too little and you will not have enough money to provide the citizens important services.
This is exactly right. No one objects to paying taxes. And what I object to from those on the Left is an ideological objection. If you can make the case that tax rates need to be this high, then make it.
“The rich have to pay their fair share” ain’t gonna cut it.
good stuff. taxes can only bring in so much revenue before they start destroying growth
taxes can only bring in so much revenue before they start destroying growth
Exactly right WS. Too high and people simply avoid taking risks. And, to be fair, too low and we leave too much tax money on the table. There is a role for government after all. Most likely much smaller than many would like, but there is a role.