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Tax Rates

A commonly discussed issue is how tax rates relate to economic growth. Supporters of tax cuts claim that a reduction in the tax rate will lead to increased economic growth and prosperity. Others claim that if we reduce taxes, almost all of the benefits will go to the rich, since the rich are the ones who pay the greatest percentage of the taxes. (Who Paid the Taxes, 1966-85?, pg 3) Tax cuts can benefit everyone and the economy if they are made in the right places and only too a certain extent. Taxes are extremely important in three key areas. An Army, to protect against foreign invaders, A police force, to protect against domestic criminals, and a court System to settle honest disputes that arise, and to punish criminals according to objectively predefined laws. (www.economics.about.com, pg 2). Its easy to see why these last two functions are super important to economic activity.

Without a police force people would spend a lot more time trying to steel what they need and a lot less time trying to produce what they need, since stealing stuff is most often easier then having to put in the time and labor of producing it yourself. Without people producing goods economic growth would stop. The people that did produce the v


Another example of services that can be provided by the government that will promote economic growth is educational and health services. Having your citizens educated will make them more likely to be productive. If your citizens are sick and stay sick then the amount of people that are productive is not 100%. Having health care facilities and health care plans will help citizens to stay well and continue to be productive.

A certain amount of government spending is required on the military, police, court system, highways, schools, and education. Infrastructure like the roads, sewage and water systems that cant be provided by the private industries have to be provided by the government to ensure economic growth. If you do not spend an adequate amount on these systems then the economic growth will not be at its full potential. While having to much money in these systems is wasteful and that’s when you can make tax cuts to improve the growth. (The Impact of Taxes on the American Economy, pg 53)

In all reality the tax cuts or increases are only the first step in predicting what will happen to the economy. The second and most important part is where the money is going to be routed or taken away from. So the national budget almost plays a bigger role in economic development, but as everyone knows the national budget is decided on by what kind of money there going to have for that year, and the money comes from nowhere else but taxes. In general it seems to me if you can find where your overspending or where you can make cuts on unnecessary services or expenditures then you will be able to make tax cuts which will more then likely promote more people to be productive because they will get to keep more of their hard earned money.

aluables would spend more time and money trying to protect what they’ve earned. In this case it is not a

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Approximate Word count = 1254
Approximate Pages = 5 (250 words per page double spaced)


  

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