Taxation effects?

Question

What are the effects of taxation and price controls on the economy?

Answer 1

A few people say that lower taxes results in growth in the economy, that has never been proved to be true.  To be true the increase in the economy, primarily the Gross Domestic  Product has to increase enough to cover the cost of the tax cut, which has never happened.  In fact, it has always failed and increased the national debt.  Interestingly, certain tax increases do tend to increase the GDP if it is matched with increased spending for internal projects like infrastructure and additional services.  

If you are thinking of price controls for fuel as in gasoline, price controls will not work.   The issue is that they can get even more money if they keep the price high.  The only way the US can resolve this is not only stopping buying oil to add to the national oil reserve but to release it to the market which will force the price down and literally break the oil speculators.  

Price controls tend not to work unless it has an expiration date and it usually isn't by much.  It is often under the thought of buy it now before the price goes up.

Foreign investment is not affected by lower taxes because most foreign investors do not pay US taxes due to trade agreement laws (they pay taxes to their own country).  Foreign investment here increases if the profit margin is greater here than in their own country.

Answer 2

yes ,lower taxation effects the economy because taxation reduction increase the foreign investment. look at http://en.wikipedia.org/wiki/Foreign_dir... and taxation reduction on public can effect in banking sector and can increase the economy .go to http://en.wikipedia.org/wiki/Economy_of_...