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comment by MadEmperorYuri
MadEmperorYuri  ·  3233 days ago  ·  link  ·    ·  parent  ·  post: 'Religious Nones' Are Growing Quickly. Should Republicans Worry?

    Cutting taxes will always encourage people to demand more government services than they would have at the lower price. Lower taxes = increase demand for government services.

I don't follow this. I imagine myself paying less in taxes, but I can't think of any services that would make me want to demand more of. It makes more sense to me the other way around: if I'm paying more in taxes, I feel I should be getting more. What am I missing?





cgod  ·  3232 days ago  ·  link  ·  

If cantaloupe gets cheaper people will choose to consume more of it. If the cost of government goes down, you feel less pain at tax time and the idea of introducing more government services doesn't seem as bad. If taxes are already high you don't want ant more government services because they are already breaking your back you will probably like less government services so that you can pay less taxes in the future.

A supply and demand function is a snapshot, they are usually in constant motion. Consumers and producers constantly change the amount they will supply and demand in response to any change in input. Taxes go up people will desire smaller government. Lower taxes and the opposition to bigger government will slacken.

Right now we consume more than we pay for. Consumption of government services is greater than the cost of those services because of tax cuts and borrowing. If people had to pay the true cost of government by paying a higher tax rate than the pressure to reduce spending would increase and government spending might actually decrease. With the current system Republican tax cuts will only serve to decrease the pressure for smaller government and should if market theory has any validity at all increase the demand for more government services.

Each of us a a level of taxes and government services that we would prefer. Because we have to aggregate the supply and demand of these services you might feel like we have too much government while another person feels like they don't have enough but the average is what should guide the course of government spending (probably not true as campaigne money probably has the biggest influence). People think they are getting what they paid for with their tax money but in fact they are getting more than they paid for because of deficit spending.

I don't know if this is still unclear to you but I'm doing my best.

Summery: If you subsidies a good people will consume more of it than they would at it's market equilibrium price (milk subsidies for instance). If you tax a good people will consume less of it than they would at a market equilibrium price (think cigarettes). Right now we subsides government spending by borrowing. Tax cuts only make the consumption of government services less painful or more desirable. If we paid the true cost of government services the market forces (supply and demand) would shrink government and help establish the size of government that Americans really desire. Doing this would not be in the interest of Republicans because they could no longer campaign on shrinking government and lowering taxes. The real Republican agenda is too get elected not to shrink government (lot of the dingbats think they want smaller government but the guys up top probably know what they are doing).