Two days ago I said I that it makes more sense to cut taxes more often little more than rare. Thanks to the American economist Arthur B. Laffer, we know about the relationship between the tax rate and tax revenue. The eponymous Laffer curve shows that there is an optimum rate at which tax revenues can be maximized. If the tax rate is lower, will decrease the tax revenue, the tax rate is too high, the economic output is lower, for example because of high taxation of labor input reduced. The problem with this curve, can be calculated that only two points, namely the point at rate 0% and 100%. On both issues, the tax revenue 0th In between, the course is not predictable. Therefore, we can not calculate the ideal tax for the Canton of Zurich. We do not even know which side of the ideal tax rate are we. Because of this uncertainty is only a practical attempt to find the sweet spot. If we are left of the point of ideal taxation, the tax losses caused by the tax cuts are great and irretrievable. The possible reactions are reduction of state benefits or tax increases. Are we the right of the point of ideal taxation, we may assume that tax cuts increase the private consumption and private investment, growing the economy and thereby the tax base. The failures are thus more than compensated. Because tax increases are unattractive and affected a performance degradation, the non-tax negative location factors, small steps on the path of trial and error are more appropriate. Larger steps involve the great risk to the dangerous left-hand side of the curve to fall.
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