Saturday, August 13, 2011

When the tax cuts expire, How will federal revenue increase?

The rich will not quit spending, with or without the tax cuts. They will spend as they usually do, if anything they may put off a trip or two or one or two very large expenditures. The fed will see an immediate increase in revenue with the tax cuts, that will soon peter out as people and industry readjust to the increase in taxes. Will industry then start to hire, no and investments into retooling may also slow, meaning fewer jobs, meaning fewer people to pay taxes, meaning fewer federal dollars to gather, and that means less money to the fed and an even higher federal debt. On the surface it does not make much sense, but a deeper knowledge of economics reveals the answer. That could be the reason progressives, democrats, and liberals fail to understand the issues and economics of a tax cut. We can only hope that some of the new conservatives running for office with backgrounds in business get elected this Fall and bring that ability and knowledge with them to D.C. Hopefully, still they get the chance to educate those there in D.C. that seem to have forgotten what it is they are supposed to be doing in D.C. (serve the people of the US). The best service they can give at this time is a balanced budget, lower taxes, and a leaner federal government.

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