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re: On a dollar basis, taxation does not hurt nor benefit an economy
Posted on 10/2/14 at 9:07 am to germandawg
Posted on 10/2/14 at 9:07 am to germandawg
quote:
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....
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
quote:
"Tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent."
Here is a general review
quote:
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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