Fiscal distribution hurts the economy --- productivity and investment loss

3. High taxes discourage work and investment. Taxes create a “wedge” between what the employer pays and what the employee receives, so some jobs don’t get created. High marginal tax rates also discourage people from working overtime or from making new investments. It’s true, as some critics say, that our current marginal rates of 39.6 percent (somewhat higher when combined with other taxes) do not depress economic output as much as the 70 percent rates that taxpayers faced in 1980. But most economists now agree that a reduction in marginal tax rates will increase output to some degree. 4. Income taxes should be cut because the overall tax burden is quite high right now. As of the third quarter of 2000, federal revenues as a share of the gross domestic product hit a peacetime high of 20.8 percent. Prosperity has made Americans more accepting of the rising tax burden, but the current economic slowdown will make high taxes harder to bear. 5. If we don’t cut taxes, Congress will spend the money. If one thing is certain in Washington, it is that Congress will spend every dollar it can get its hands on. Every interest group wants something–a road, a dam, a social program, more teachers, more policemen, more corporate welfare–and members of Congress want to be liked. The only way to “put the surplus in a lockbox” is to let the taxpayers keep it.