I'm actually driving, and dictating to my phone, or I'd look this up myself, but you have to consider taxes relative to overall spending.
Why would that be? I mean, surely our deficit is a direct result of taking the amount of revenue by taxes and comparing to government outlays. But I think were the discussion would be is which value is deemed primary. Do we look at our spending and then raise taxes to increase revenue? Or do we look at our revenue and decide we need to decrease spending?
My contention is that we need to keep in mind that whenever we are talking about policies involving people, we are looking at an organic, not a mechanical system. A mechanical system is like the car you are driving right now. If you move the steering wheel to the left, it pivots a steering shaft and gear mechanism that converts the wheel’s rotational input into side-to-side motion, which angles the front wheels and changes the car’s direction. It is predictable every time you do so.
Human behavior is like traffic. While the normal state of traffic is largely predictable, when you add a new stimuli--a deer jumping out of a ditch, a tire blowing out on the RV in front of you, a police officer merging into traffic--everything changes--many times in chaotic and unpredictable ways which compounds with the actions of other drivers.
When you raise taxes on people, they act in their own interest. This might be just not having as much money to go out to dinner, not buying that new car, moving to another state, or even companies moving out of the country or at least their funding to tax-friendly accounts overseas. Take the Luxury Tax of 1991. It was imposed to raise revenue and rich people's yachts seemed like a politically easy thing to do. Except, this one act largely destroyed the American Yacht Industry which had previously been one of the biggest in the world, over 10,000 Americans lost jobs and the government later would find it actually lost revenue. Taxes can be that deer jumping onto the highway.
For the record, I do not agree with cutting taxes any more and was not altogether pleased with the no-tax on tips provisions. Although the impact is probably not too great as I would imagine that the tax load for most of those that this would apply to would be that much anyway. But, I see calls that we should have scrapped the 2018 tax cuts as a pretty big deer jumping into traffic.
For example, if the 2018 tax cuts had not been extended, a married family of 4 with an total income of $80,000 per year would have seen their tax liability increase by $3370. That's nearly $300 a month they would no longer have available to pay for groceries, gasoline, rent, etc. Like I said, that's a pretty darn big deer.
That is why I think we are at the point where we need to begin limiting the increases in government spending to allow for the economic growth to provide more revenue without touching rates to where the defict/GDP begins to shrink.
Hello Mr Rawls!
