Friday, August 17, 2012

The Tax Debate

Pathways Advisory Group, Inc.
Dustin Smith, CFP®

“America is a land of taxation that was founded to avoid taxation.” Laurence J. Peter

What is the proper level of Taxation?  What is “fair”?  What is most beneficial to the economy?  How will the economy react to a change in Tax Policy?  Do higher Tax Rates increase Tax Revenue?   These are tough questions facing every nation.   There is plenty to debate and lots of history to consider.  The history of taxation in this country is full of experiments.  Why is it so contentious this time?  Because of the economic backdrop.  Because of philosophical differences.  Because behavioral responses (to a change in tax policy) are difficult to predict.  Because the “facts” are hard to find.  Because we are dealing with two incredibly complex systems, taxation and economics.  If you are interested in the debate, take a look at this article from the Wall Street Journal.    

For a deeper look, the Laffer curve provides some of the theoretical backdrop for this discussion. 

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