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> "cuts ... can't cost the government more in tax receipts than it's gaining back by [not] paying my salary" Not exactly true. Your salary doesn't disappear o
by lotharbot 16y ago
> "cuts ... can't cost the government more in tax receipts than it's gaining back by [not] paying my salary"
Not exactly true. Your salary doesn't disappear once it's been paid to you. You spend it, someone else gets it, they spend it, and so on. At each step, taxes get paid, which the government spends, following the same pattern. Over the course of the average year, each dollar changes hands some number of times between about 6 and 12 (google for "velocity of money" for more info.) As a result, the aggregate taxes on your salary and its "inheritors", as it works through the economy, can (in some circumstances) actually end up being more than your salary itself.
Note this is not an argument either for or against any particular bit of government spending. I'm merely noting that both tax increases and spending cuts can have counter-intuitive effects, and that those effects need to be accounted for when trying to understand how a change in government policy will affect the economy.