i used to think that the Fed Gov paid for Goods and Services through taxes collected.?

But I keep reading that the Republicans say that We can pay down the Fed. Deficit by cutting taxes. So why don't the Republicans eliminate every ones taxes and eliminate the deficit? Then lets continue to not pay taxes , until we can afford National Health Care for all Americans. Or until we have Health Care that is equivalent to Canada or Cuba? Also if I quit paying taxes, or paying for Goods and Services, how long before I am a Millionaire, too. Please hurry with your answers because April 15th is almost here. Also I think I have a hernia and need to become a Millionaire so I can afford to pay my own way through life, and get the surgery I desperately need. Also it seems like an ideal time to buy up all the houses I can because so many Americans are losing theirs. Is this what they call a "Buyers Market?" Republicans and Conservative talk radio have made it clear Obama wrecked the world with his wars,taxes,and Liberalism in only 100 + days. Also, I know this statement shows I lack Family Values but I want to have Sex with Hot Brazilian Women like that Conservative Republican Gov. or Sen. is, and I want to be like Rush Limbaugh and get addicted to Oxycontin. I am sure being a Millionaire would help Me reach the American Dream. Thank you for your help. And please don't quit paying your taxes and bills until I have several million dollars first. I am sure I will soon be saying; "Trickle Down Economics Rules!" AND; "Supply and Demand Economics is so Liberal"

3 Answers

  • 1 decade ago
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    If you are saddled with credit card debt, do you take a lower paying job to pay off your debt? Of course you don't! You cram as many dollars as you can get your hands on -- both by cutting costs and increasing revenues -- into the debt to reduce it. Government is not much different.

    The claim that cutting revenue will reduce deficits is patently absurd even to a 3rd grader. While the dynamics of economics are not all quite that simple -- it IS possible for a SLIGHT tax cut to help generate additional total tax revenues by freeing up funds for expenditures that generate taxable income -- broad scale tax cuts will not generate sufficient total tax revenues to offset the revenues lost by the tax cut in the first place.

    GHW Bush hit the nail on the head when he called Reagan's "Supply Side" economics "Voodoo Economics." The supply of goods does not generate economic growth! Never has and never will.

    The so-called "trickle down" theory presumes that the reduction in taxes will lead to jobs. The truth is that no employer anywhere ever hired a new employee because his tax burden dropped. Companies hire new staff when it becomes impossible to maintain acceptable production of goods and services with the current staff and the cost of hiring a new employee is less than the additional revenue that the company will generate by hiring the new employee.

    Tax cuts generally wind up in the pockets of the company's owners (shareholders, etc.) not in the pockets of new employees! Putting more money in the owners' pockets MIGHT lead to increased spending and demand but there is NO guarantee that this will happen. Much of it stagnates in investments which don't directly generate any consumer demand.

    The first thing that you learn in Econ 101 is Supply and Demand and that economic growth is driven by consumer demand for goods and services. That basic concept has been proven time and again over hundreds -- hell, thousands -- of years.

    A slightly more advanced concept, probably in the 2nd or 3rd week of Econ 101, are what drives demand. These factors are somewhat more complex and while the price of goods has an influence (but only to a point) as does the amount of money in the consumer's pocket, the main driver is the consumer's confidence that the economy is healthy and he can safely risk spending money now as opposed to saving it for a pending economic disaster.

    That's where we are sitting right now. Those of us who are lucky enough to be working have been holding on to many of those dollars that we were spending a few years ago as a hedge against a job loss. (I've paid down a lot of debt in the past 2 years and have increased my savings substantially.) These patterns do nothing to stimulate economic development because consumer confidence is low. Dollars in the bank do nothing to generate profits for those who sell goods and services! Without those profits and the tax revenues that they generate the economy becomes a "race to the bottom" with what are obviously catastrophic results.

    Right now our major problem is not deficits but the specter of economic disaster. Hoover proved conclusively that cutting government spending during an economic downturn is NOT the way to recover the economy. We were actually well on the way to economic recovery in 1937 when Hoover and his fellow Republicans slashed spending and the economy quickly obliged by spiraling back into the abyss.

  • 5 years ago

    First - unemployment does not belong in a welfare discussion. It is NOT welfare, there is no "means test". Your employers pay taxes to cover UI. SSI - the process to get this bc of a disability is EXACTLY the same as for SSDI. It can take a couple years to finally get approved. The only actual cases of fraud I've found were people who did qualify but then got better and never told SSA. Just try and collect! And SSI isn't all people who never worked. Some people worked hard for many years, self-employed or contract labor. But they foolishly never paid in, leaving them nothing. This: Food stamps are mutually exclusive with unemployment insurance and SSI. Is inaccurate. Only California prohibits SNAP with SSI, but the provide a $200 state supplement which is better than SNAP. If you qualify you can get SNAP while on UI everywhere. Tanf is the only issue. Payee only (all those grandmas raising grandbabies) can collect forever, without regard to their income or assets.

  • 1 decade ago

    Think about it a moment. If income taxes are 0 there will be no revenue. If they are100% no one will work for cash and there will be no revenue. We know that in between there is revenue. So, sometimes an increase in taxes will increase revenue and sometimes it will decrease revenue. The trick, and argument, is about where the point of maximum revenue is. There is another argument about whether maximum revenue should be the target. Some people will prefer higher taxes for more equality even at the expense of revenue, and others will prefer lower taxes to have more control over their own income, again at the expense of revenue.

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