Gilchrist Wrote:
Nov 24, 2012 2:35 PM
To an extent, tax rate cuts do increase revenues because they affect the timing on the realization of capital gains. We are apt to see an increase in revenues for the 2012 tax year because corporations are paying dividends and investors are realizing gains ahead of the projected rate increases. The effect will be a one time event. OTOH, he is mistaken;;there is tax rate below which any further reduction reduces revenues. To demonstrate, let us assume a negative tax rate (meaning the government passes out free money). Ooops, the Obamanation has already tried that with a substantial portion of the population and revenues have declined..