Raising taxes to reduce the deficit NEVER works; here’s why

It’s easy to argue that raising taxes is not a viable way of increasing federal government revenues in the long-term, because it tends to reduce prosperity in the areas being taxed and provides incentive for people to avoid the new or higher taxes; after all, the richer people are, the more they have to lose via taxes, and the more willing they are to hire accountants and tax lawyers to help them find loopholes, tax shelters, and other exemptions.

But this article offers an even better reason for avoiding tax-hikes to reduce the deficit: history shows that it is never used to reduce the deficit, because Congress can’t resist the temptation to simply spend it.

Specifically, the authors point out that every dollar in new tax revenues results in more than a dollar in new spending. This holds true regardless of the time period, financial data, lag structures, and control variables they considered. In short, no matter how they sliced it, the data shows that Congress spends more than the revenues that come in, period.

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About Jamal Kheiry

Public relations consultant with experience in domestic and international journalism and public relations. At it since 1995.
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