Sam McDonald Chapter 4 #6

An interesting view that was presented in chapter four of Naked Economics was the idea that cutting taxes would, in the long run, raise the total revenue of the government. The first time I came across this passage I had to re-read it since it seemed counter intuitive to me. Although many people would argue for my initial thoughts, the opposing side does have a valid argument. Cutting taxes helps the economy by putting more money in the pockets of individuals and stimulating hard work. Both of these things help the economy grow, and potentially the economic growth could surpass the revenue lost in taxes, making cutting taxes an logical decisions for the government. Consequently, Raising taxes generally makes individuals change their behavior in ways which effect the economy negatively. Although both of these things are true, in the majority of circumstances a government can not cut taxes and expect money for programs to go up.