There are still some shrill voices insisting that lowering tax rates increases revenue to the government based on increasing economic activity. To some of us this is a dubious claim, since the 'evidence' to support it is largely empirical and/or imaginative.
Follow this to it's logical end: If there is a formulaic relationship between lowered rates and increased revenue, as the rates approach zero, the revenue would approach infinity. Seems unlikely ? Maybe there's an optimum rate ? If so, why haven't we found it ?
Thursday, October 21, 2010
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