04-24-2003, 07:04 PM
|
|
|
Too lazy to set a custom title
Industry Role:
Join Date: Jan 2001
Location: God's right hand
Posts: 19,789
|
Quote:
Originally posted by Lenny2
Tax cuts being a stimulus to the economy is a THEORY, not a FACT.
The logic is that by cutting taxes, you put more capital into the private sector, and that capital can then be used for businesses to expand, hire more workers, etc.
This would work within the framework of a balanced budget.
But the budget isn't balanced, so the tax cuts will increase the deficit. So what to govt gives the economy with its right hand in the form of a tax cut, it takes away with its left hand by borrowing capital to cover the deficit.
So the amount of capital available to the market remains unchanged, and as a result the economy remains unchanged, but our debt grows higher which means our interest payments in future years become higher as well.
|
Yes, so lets raise taxes until the economy recovers. 
__________________
I'm not a dinosaur, I'm a crocodile. I've seen dinosaurs come and go and I'm left unimpressed.
|
|
|