I always hear the Republican party state that lowering taxes increases tax revenues and spurs economic growth. This seems to me to be a another form of the argument "we don't need taxes at all" since , using this logic , as tax rates approach zero tax revenues approach a maximum optimal value. From what I learned from the Operations Research courses I took in college I think the tax revenue argument could be represented as an optimization problem with one optimal solution on the graph of tax rate vs tax revenue. The optimal tax rate would be a point on the tax rate vs tax revenue graph where moving to the left on the x-axis ( tax rate ) would lower the tax rate to a point where any increased economic activity could not make up for the lose of revenue due to the lower tax rate. Moving to the right of the optimal point on the x-axis of the graph would raise taxes to a point that would discourage economic activity , thus reducing revenues as well. I know there are many , many factors involved in solving this problem , but do I have the general idea on how to solve this?
No more dohnuts for government employees!! :wink
A starting point would be an efficient government service, but this might be a oxymoron, and looks like it is not inlcuded in the maths.
This alone will help reduce taxes.
:bg
I guess there is a theory already in place that states what I was thinking. This is call called the "Laffer curve" : http://en.wikipedia.org/wiki/Laffer_curve .......
Tax is the source of any government, without tax, the USA will not this strong. The best decicion was, take tax as many as you could to people, but no more than 10% of people routine income.