Tax cuts will ALWAYS result in short term deficits
These will often necessitate cuts to services
Saying any different is complete nonsense #Deficitpic.twitter.com/2HxhydTLGS
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The idea is that cutting taxes will stimulate growth, causing people to spend/earn more and thus bringing in more taxes overall However, even if this does work - and it's contentious - it takes time
The simplistic theory is that cutting taxes causes people to take home more money, and spend it overnight Businesses also pay less tax, and so pass this on to their employees, who earn more and thus pay more tax
The fact is that the relationship between tax and growth is not as straightforward as all that, and reductions in taxation often don't result in growth for years (if ever)pic.twitter.com/yg2nz2lZf0
Thus, tax cuts will almost always result - at least in the short term - in cutting healthcare, defense, schooling, or other spending The other option is watching the deficit rise as the government borrows more to cover their lost income
A simple analogy would be to imagine if you cut your income by 5% but kept your costs the same Either you have to reduce your costs (cut services like healthcare), or you have to borrow to cover the difference
The long term is a harder question, but one thing that is important is that it is politically much easier to cut taxes than it is to raise them You should be REALLY SURE that the tax cut is going to benefit everyone, because if it doesn't there's no going back
But this is isn’t true either and there is a simple proof of it. The government doesn’t have a ‘limited pool’ of money coming in. It creates the currency. It’s nonsensical to collect something that you exclusively create. But they do need to tax in order to destroy currency.
And that might seem like nitpicking but it’s a vital distinction. The ‘spend’ (ie creating currency by spending it into the economy) always comes before the tax. There’s no limited pool of money, the formula is the other way round. You’re starting with a false mathematical model
As you brilliantly espouse with health science, it’s important to be accurate about these things, and the mainstream metaphor of a sovereign government being like a household in regards to money is provably false and incredibly damaging.
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