re: On a dollar basis, taxation does not hurt nor benefit an economy

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And if he cleans toilets at Jack in the Box?

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He is getting all tax monies back as a refund.

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Where is the money going

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I think I have an idea where it goes. It goes to banks or to other investments. Banks pay interest to investors but not usually enough to counter inflation to any substantial degree. However, for every dollar the bank takes in and holds in reserve, it can borrow $9 from the Fed and loan it out with interest. So it's a pretty good deal for the banks. Banks need to make money and they promote economic growth.

However, the Fed gets its money by printing digitally or on paper like Monopoly money at no cost to them.

And that's another topic.

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The money a firm could potentially get back by someone spending tax dollars can be used for investment again.

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Even in some absurd scenario where the allocation is unaltered, the hypothetical firm would not "get back" the same spending or investment. Anything that would come back would first have gone thru a less-than-productive middleman.

I understand that you are trying to say that taxation itself causes no drag, because the way the government spends can "undo" it.

The problem is that the act of taxing is itself costly. That means that right off the bat, there is a net loss unless the government spending is significantly more valuable than what the consumers would have chosen, rather than equally valuable. It has to be "significantly more valuable" because to offset the cost, the spending must be done in a perfectly-targeted manner, requiring smart and proficient re-allocators, which itself is yet more costly. And it must done so that nothing more is spent than is necessary- and of course, this goal is not truly a feature of government at any level.

bullshite. For an example$ look at the history of the capital gains tax, the revenue it generates, and it's effect on the economy

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Yes, and more importantly you have them also. If you choose to accept the premise that any level of taxation is bad for business because it is bad for business that is your choice. The fact is that the main impact of taxation is on individual economies....since no one enjoys taxation we find it necessary to overstate the negative impacts which are negligible...not non-existent but fairly small...because being honest and admitting that the main detrimental effect of taxation is that it pisses us off. Again being pissed off can negatively impact business but by the nature of capitalism you better get some vagaseal and quit whining about being pissed off....

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Wow, you are just wrong. Best I can give you is that it is complicated. It depends on the type of tax (and tax cut) and how corresponding expenditures are made (or cut).

It is possible that raising taxes and spending it on basic societal infrastructure (court system, police force, etc) helps the economy, particularly in lesser-developed countries. I doubt that would be true in the US.

I can also see a tax cut that cut spending on key infrastructure (like ports, particularly here in LA) might result in hurting the economy.

These kind of corner cases aside, yes it is is a commonly accepted economic tenet that raising taxes hurts the economy. Not in every case and it is easy to overstate the effect. But you are kidding yourself if you think otherwise.

Here is one cite

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"Tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent."

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Here is a general review

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So what does the academic literature say about the empirical relationship between taxes and economic growth? While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions, and monetary policy. In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth. Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption taxes and property taxes.

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