Saturday, June 04, 2005

Why tax cuts work, (every time)

Some people believe that when the government raises taxes, the government actually takes in more money. That is not the way it happens. When the government lowers the tax rate, it takes in more money, than when it raises the tax rate. Why is this so? Because more taxpayers enter the market when the tax rate is low. Conversely more taxpayers leave the market via "tax shelter" accounts and offshore accounts whenever the tax rate is raised. Whenever the tax rate is lowered, people pull their money out of such shelters and use it in the free market. Believe it or not a Democrat president understood this a few decades ago; his name was John F. Kennedy.
If only his party today would understand Capitalism's Truths as well as he did!