Limitation to taxation?

Question

plz just contribute a little about this topic, share ur knowledge. :D

Answer 1

Limiting Taxes could lead to the so-called tickle down scenario where the  money that is saved by people will be be spent by them and when it reenters the market will revitalize and help everyone.  

Answer 2

Logical interpretation of progressive tax systems shows that as tax rates rise, propensity/incentive to avoid paying the tax increases to the point that revenue generated by the tax will reach a maximum point and begin to decline afterward.  This is demonstrated graphically by the Laffer Curve and historically by the Kennedy tax cuts from the 1960s, the Reagan cuts of the 1980s, the Clinton capital gains cuts of the 1990s, and the Bush tax cuts of the 2000s as well as several non-US examples.  When tax rates were cut, capital was more efficiently allocated in the private sector and the tax base was broadened.

The exact point at which revenue maximizes is not an exact science.  One could presume that the maximum point would logically follow the point at which government can finance all essential services at their most efficient level of operation.  As we all know, governments are incapable of actually doing this in practice and while I may consider "essential services" to only include defense, emergency management, care for those physically/mentally unable to care for themselves, and solely those activities that remove barriers to commerce; others may include many other items in the list of "essential services".

Also, the increased economic activity resulting from the lower tax rate would likely reduce the number of people requiring government assistance and broaden the tax base.  This would result in a lower maximum point of taxation to produce needed revenues.