Monday, May 15, 2017

Tax Cuts Do Not Cause Reductions In Federal Income -- They Increase Revenue

In order to put people back to work, Donald Trump has proposed legislation that would drastically cut taxes for both individuals and businesses. But democrats, and some republicans too, say this might backfire as it will also reduce income to the Federal government. Where did this rumor that increasing taxes increases Federal revenue come from anyway? It's a fallacy.

Rush Limbaugh gives a perfect example of how lowering taxes generates more government revenue thatn tax increases. He said,
"If it’s hard to understand lowering tax rates and increasing revenue, let me ask you this. Have you ever seen a store put things on sale? Obviously you have. Why do they do it? Why do they lower the cost of certain things to entice you to come in and buy them? Well, because they’ll sell more of it. The lower the price of an item, the more likely people are to buy it, and the more people that buy it, the more are sold, by lowering the price. When airlines are feeling the heat of competition, what do they do? They lower fares. If one airline lowers ’em, they all have to on the same routes. Or they’ll throw you off, right, or kill your rabbit, but don’t confuse me here.
On a government-run transportation system, what happens? When the Port Authority of New York and New Jersey is in a crunch and it’s not collecting enough money, what do they do? They stupidly raise fares. They do not try to get more people riding; they rip off the people who still are by charging them more. Does it ever work? Why don’t they reduce fares? Why don’t they lower the price of going across a bridge or getting on the subway? They never do. Well, I can’t say never. But you know as well as I do that mostly those costs increase. When a business raises the price of an item that you’re used to paying X for, are you more likely to go out and buy it again, or less likely, maybe look for someplace else to get something like it, something close to it? 
Look, this is simple math. It’s not even arguable. The Democrats have so corrupted our understanding of economics and productivity that lowering tax rates is now considered to be some kind of sop to the rich. I mean, it’s just profound to me, the damage inflicted on this country by the Democrats in their pursuit of perpetual power.
So true.

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