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There is a significant difference.First, what's your alternative to raising taxes? Keep tax revenues low so the government can keep hammering the populace with inflation from deficit spending? Paying for the Iraq war with a bake sale?
Second, I don't understand how people think supply side economics is better than demand side economics.
Supply side economics 101:
1. Cut taxes on the rich.
2. They invest in businesses.
3. Businesses use the added money at their disposal to expand and improve products, which benefits consumers, adds jobs, and benefits the economy.
4. Total tax revenue, in theory, goes up.
Demand side economics 101:
1. Cut taxes on the poor and middle class.
2. They buy more things from businesses.
3. Businesses use the added money at their disposal to expand and improve products, which benefits consumers, adds jobs, and benefits the economy.
4. Total tax revenue, in theory, goes up.
The only difference between the two is that the "supply side" tax cuts make it easier for wealthy people to stay wealthy and harder for everyone else to get wealthy. i.e. It weakens the middle class even further.
In terms of how a business acquires funds to expand and improve products, they have two choices. Either from retained earnings at the end of the year (leftover cash after expenses and dividends paid to shareholders), or from additional investment.
Demand side economics tries to boost company revenues, which boosts retained earnings.
Supply side boosts additional investment.
When you give money to middle and lower class people, they are more likely to spend it. If a company has a 10% profit margin, then that means 10% of every dollar the government gives back to a poor person will go towards retained earnings and consequent investment in business.
When you give money to rich people, they are most likely to save it and invest it. Therefore, 100% of a dollar given to a rich person will go towards investment in business.
(NOTE: When I say rich people, I don't mean trust-fund leeches... I mean people earning more than $120,000 per year)
Therefore, which strategy is most likely to boost the economy?
I'm several years into my Ph.D in finance, and from what I've seen both in academic and private sector economics, demand-side government giveaways to stimulate economic growth are considered jokes. Giving money to the middle and lower class to boost the economy is like treating a broken leg with first-aid cream and a band-aid. If you just want to make people feel better about things (which is important), then fine, but nobody pretends that it actually does anything.
As for government tax revenues, I'd prefer we continue to cut spending to balance the budget. My personal preference is to eliminate income taxes, and establish a variable national sales tax that adjust every year to cover government spending.