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    The Budget: Tax Rate's Negative Affect On Tax Revenue
    4 July 2007

    Question: When is a tax cut compatible with a revenue increase?
    Answer: When inaccurate nomenclature is used.

    It is no wonder that the public is confused by the consistent use, by practically all the media, of the word "taxes" as meaning "tax rate".

    The two are as different as speed is from distance (both are derivatives of each other). Any reader would be justified in interpreting the word "tax" as the sum of money accruing to the treasury. But it is generally used to denote "tax rate", the percentage of income taken.

    A lower tax rate can lead to higher tax revenue, as shown by economist Laffer (the "Laffer curve") and on several historic occasions by tax rate cuts made during Presidents Kennedy, Reagan and now Bush's tenure.

    The media would perform a great public service by henceforth calling a spade a spade.

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