Doug Miller wrote:



Well, you have *part* of this right, but you haven't taken it to its
logical conclusion. What happens to that extra income when they spend
it? It doesn't
just evaporate. They're spending it on *something*.

False assumption. It often goes into unspent money - savings. Or... it
goes into paying down debt which is good, but viewed as an evil in our
current definition of a healthy economy. Money spent paying down debt is
not considered money returned to the economy - or in your words "spent on
something".


Suppose they
decide to buy
a TV, and eat out one more time a week. One family doing that doesn't
make any difference to the economy -- but a hundred thousand families
doing that means
a hundred thousand more TVs sold, and about five million more
restaurant meals
a year. That creates jobs for waiters, cooks, and anyone involved in
the
production and retail of TV sets. It means more jobs for truck
drivers hauling
TVs, food, and dishwashing soap. The waiters, cooks, retail clerks,
and truck drivers buy food, they buy cars, they buy houses... it
expands exponentially.


And when they don't do that with their money???

--

-Mike-

Surely you don't suppose that all those newly employed waiters,
cooks, clerks,
and truck drivers pay no taxes, do you?

That's how cutting tax rates leads to an increase in tax revenues.