Wanting to drown Uncle Sam (denying revenue to the Federal government so it’s small enough to drown in a bathtub, in the words of Grover Norquist) is as naive as Karl Marx’s formulation of the same idea: the withering of the state. The extremes meet.
Month: February 2012
Revenue neutrality doesn’t mean static receipts
We need a term to describe changes in tax laws that leave the government bringing in the same amount of revenue (as in earlier periods) given changes in the economy. Revenue neutrality means something else: changes in tax laws will result in the government bringing in the same amount of revenue if economic circumstances DON’T change. Budget neutrality and deficit neutrality mean pretty much the same thing as revenue neutrality.
A government may need a certain amount of revenue to do what it does, that is, it may need static receipts — even when the economy grows or shrinks. In a shrinking economy, tighter tax rules or higher rates are needed to produce static receipts. (Now that may be oversimple: government may need higher receipts in bad times for unemployment benefits and the like. But I’m disregarding that need for now.)
So what’s the term for tax law changes that produce static receipts in a changing economy? Funding neutrality? Receipts neutrality? Steady revenues?