Cutting taxes is a ridiculous political strategy.
Okay, to be fair, I’m fine with reducing taxes on those with lower incomes. But it shouldn’t be reduced (let alone eliminated) for those with higher incomes, especially corporations.
The biggest difference between personal income tax and corporate income tax is that personal income tax is calculated on what you receive as a salary (minus a handful of deductions), what we could call our personal revenue. Corporate income tax isn’t calculated on revenue; it’s calculated on profit, after a company has paid all of their expenses.
Can you imagine if individuals paid taxes on what they had leftover after their expenses?
Anyhow, as I’ve said before, taxes are payment for services rendered. We (individuals and corporations) pay taxes to pay for the services we consume, whether that’s education, health care, emergency services, transportation networks, parks, or waste removal.
The problem with reducing tax rates is that the cost of providing the services that tax revenue pays for doesn’t go down.
Reducing the corporate tax rate from 12% to 8%, for example, does nothing to address the fact that population has increased, so there are more people accessing the same health care services.
Eliminating the sales tax does nothing to address the fact that inflation has increased, so it’s more expensive to buy supplies and pay for other costs of delivering education.
In fact, the only way to reduce the cost of providing those services, is to reduce those services: provide less service for more people.
It’s literally impossible to maintain—let alone improve—service delivery if the cost of delivering that service and the number of people accessing it both increase, while also reducing tax revenue.
Governments who implement tax cuts will always reduce service quality. There’s no other way to do it.
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