Difference between revisions of "Tax cuts"
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m (reinsert: this is paradoxical, unless you know more about economics.) |
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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 | + | '''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 result in a net increase of [[tax revenue]]. This may seem paradoxical but can be easily explained by the fact that lowering taxes can stimulate the economy. 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:Taxation]] | [[Category:Taxation]] | ||
Revision as of 12:05, January 19, 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 result in a net increase of tax revenue. This may seem paradoxical but can be easily explained by the fact that lowering taxes can stimulate the economy. 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.