Direct Taxation Reduces Economic Growth

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by Martin Armstrong

ANSWER: Yes, but there is another influence — rising taxes. The economy declines when taxes rise for the simple reason that when politicians raise taxes, they are reducing the net disposable income. Simply put, if I give you $100 and then demand you give $90 back, but the year before I gave you $80, you can point to the fact that your income rose. However, you can only spend what you have left in your pocket. Women may have won the independence they were protesting for in the 1960s, but now they have lost the right to stay home and raise the kids. What use to take one income to support a family BEFORE the payroll tax now requires two. Once the government began income taxes (DIRECT TAXATION) economic growth rates gradually declined. We have been in a protracted decline since World War II. Tax revenue in France is 46% of GDP as people leave to invest elsewhere.

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