Would you make more money (i.e. profit) if you sold beer for $4.00 a six-pack or $8.00 a six-pack?
If you answered $8.00, you must be a Democrat, government educated, unemployed or all of the above. Clearly, the answer depends on much more complex factors than the price of a single six-pack. Even for economic illiterates, you would have to recognize that people might buy a lot less of your beer if you charged such a high price.
This is what frustrates me about Democrats and their pundits as well as the CBO. When any tax cut is considered, the impact is computed in a linear fashion with absolutely no consideration of the economic impacts of the tax cut.
For instance, if beer cost me $3.00 per six-pack and I sold 100 six-packs for $4, I would have made $100 profit. According to the above method of calculating tax revenues, if I raise the price of my beer to $8, my profit would obviously by $500!! WOW! Of course, at that price, my unit sales would probably go down to about 2 - or how many six-packs I could sell some extremely desperate alcoholic.
So, when I see news items decrying tax cuts such as "how will the gov't pay for the tax cut" or "the cuts will make the deficit bigger", I simply cringe. Yet, I'm guessing that there are a fair number out there who just assume that tax cuts means less revenue and tax increases mean more. Certainly, this is the prevailing attitude in the press.
I'd just like to know who these people are so I can ask them what would be a fair portion of their income to pay in taxes.