Tax Cuts Never Cause Deficits

Understanding Basic Economics . . . Don't Be Deceived. Tax Cuts Are Always Good for the Economy

A key element to Bloomberg’s flawed thesis is his claim (and that of most on the left) that the Jobs Act tax cuts will cause deficits. There are at least two reasons his reasoning is fundamentally…

First, it is a well-settled principal that you don’t raise revenue by raising tax rates. Raising rates always has the effect of reducing economic activity. What you tax, you get less of. When you tax income and productivity, you get less income and productivity. When you reduce tax rates, there’s more incentive to work harder because people will keep more of what they earn. It’s immutable human nature. Harder work means more income, which means more tax revenue, even at lower rates.

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