Originally posted by anileve
Lowering taxes provides incentive for businesses to borrow, and buy more capital. When the supply curve for capital shifts right so does the demand curve for labor. I do not only mean labor as in factory labor. Labor consists of computer programming, a surgeon, a lawyer, a businesss man or women, or any job. This will provide more employment opportunities which will in turn provide more real income for families. Households are then able to spend more, and the circle continues.
I would like to point out though that I am dissapointed with the economic policy implemented by the present adminstration. I love lower taxes, BUT, that means that spending also has to drop. The present administration has lowered taxes, and increased spending. I do not know what the rationale is behind that, but that is what is happening.
Just a quick fact. Not all states are in a deficit by the way. New Mexico is in a surplus, and Nevada is higher new teachers and bringing in new businesses every day.
And most states are in a deficit, not mainly because of the federal government. We both agree that the taxes were only cut for federal purposes. The states have been spending like wild, and California has the highest tax rate in the US. Not to mention, our deficit is larger than all the states deficit's combined! That was caused by gross mismanagement of the budget. I can go into detail if you would like, but if you already know how the budget was mishandled, I wont need to.
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