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GUEST,mark-s(on the road) BS: Revenue Neutral? Explain Please (47) RE: BS: Revenue Neutral? Explain Please 16 Oct 12


Same justification used by JFK in 1962. Lowering rates leads to an increase in economic activity. So by lowering rates on "X" you get more of "X", so you get the same or more revenue from "X" at the lower rate than you would have gotten from "X" at the higher rate.
Easy to understand at the top and bottom limits:
0% tax rate on "X" yields no revenue because there is no tax.
100% tax rate on "X" yields no revenue because there is no "X".
Somewhere in the middle is a tax rate which maximizes both - but - no way am I smart enough to tell you what it is!
Mark
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