Difference between revisions of "Tax cuts"
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| − | '''Tax cuts''' provide a stimulus to the economy, because they reduce the cost of doing business and allow ordinary citizens to spend or save or invest more of their own money. Often cutting a tax rate will, paradoxically, result in a net increase of [[tax revenue]]. The best example is the tax on [[capital gains]]. | + | '''Tax cuts''' provide a stimulus to the economy, because they reduce the cost of doing business and allow ordinary citizens to spend or save or invest more of their own money. Often cutting a tax rate will, paradoxically, result in a net increase of [[tax revenue]]. The best example is the tax on [[capital gains]]. This phenomenon is described by the [[Laffer curve]], which states there exists a point when increasing taxes actually decreases tax revenue. |
[[Category:Economics]] | [[Category:Economics]] | ||
[[Category:Department of the Treasury]] | [[Category:Department of the Treasury]] | ||
Revision as of 14:58, January 7, 2009
Tax cuts provide a stimulus to the economy, because they reduce the cost of doing business and allow ordinary citizens to spend or save or invest more of their own money. Often cutting a tax rate will, paradoxically, result in a net increase of tax revenue. The best example is the tax on capital gains. This phenomenon is described by the Laffer curve, which states there exists a point when increasing taxes actually decreases tax revenue.