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Taxes generally have a "punishing" effect. When you lower taxes, you reward business and investment, thus increasing the size of the pie.
For an example, look at the Regan tax cuts. They actually INCREASED government revenue (tax) receipts because they boosted the economy.
In practice, if you encourage a businessman to make a million dollars by lowering his taxes, he will do that... and more. In the process, he will hire people. If you punish him by raising his taxes, he will shut his business and move to a friendlier jurisdiction.
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