Friday, May 30, 2003

Taxes

Filthy Lucre

Johno, I agree that the sending rebate checks is fairly ridiculous. But probably not for the same reason. While a rebate check sent to every tax payer might provide a transitory boost to the economy, it is at best a short term solution. The way to effect the economy with tax cuts is to, well, cut taxes. When people know that their taxes are lower, then they will change their behavior in a way that could effect the economy. This applies to regular income taxes, which might affect consumer confidence, consumer spending, housing starts and the like. Lowering, permanently, dividend taxes and capital gains taxes would increase investment and capital development. It has been shown that lowering taxes increases revenue - because the larger economy that is spurred by lower taxes yields more money in absolute terms, even though percentage of the government’s take of the total economy is smaller. These rebates will not have this effect, because people - individuals and businesses - have no confidence that taxes will remain low. The economic picture is indeed muddled. Lowering tax rates would be a solid thing that people could count on.


Posted by Buckethead on 05/30/03 at 06:35 PM
Filthy Lucre • Permalink