Taxes and Their Affects

        This is a paper that will inform you on what happens when the government raises and lowers the taxes. I will go over how it affects net personal income, how it affects GDP, how it affects the economy as a whole, and whether or not taxes should be raised to equalize income.

        When thinking about taxes there is a lot to think about for the government. For example say that the government had 100% tax this would have a negative effect on the amount of taxes the government would get, if you had to pay 100% tax you would probably not work because you would be working for no income. You would probably spend time growing a garden, finding food, and using the batter system to get the things you need to live. Now if you were to go the other way and you had to pay no tax you would think that things were pretty good being able to keep a 100% of the money you earned, but then the government would have no income to stay running. This would be bad because we would not have anyone looking over us and keeping us protected from other countries, and we would not be able to have a military to protect us because they are all paid by our taxes so they need that money to run.

        Government tax revenue does not necessarily increase as the tax rate increases. The government will earn more tax income at 1% rate than at 0%, but they will not earn more at 100% than they will at 10%, due to the disincentives high tax rates cause. Thus there is a peak tax rate where government revenue is highest. The relationship between income tax rates and government revenue can be graphed on something called a Laffer   Curve.

        First I will go over how lower taxes affect the economy. It is hard to say if lowering taxes is better for the economy one of the thing that have to be looked at when bring this up is, where are the tax cuts coming from and what the revenue that those taxes were being used for is being cut. Because if you are getting...