Monday, December 13, 2010

$1.00 of Taxes= $1.17 Worth of Government Spending


            The Wall Street Journal recently published an article discussing the repercussions of higher taxes.  In the late 1980s, Richard Vedder and Lowell Gallaway of Ohio University authored a paper for the congressional Joint Economic Committed (known as the $1.58 study).  This study found that for every new dollar of new taxes raised, more than one dollar was spent by Congress.  The research was updated in 2010 and not much has changed.  Using statistical analyses that factor in inflation, wars, and business-cycle fluctuations, the new research shows that over the entire post-WWII era, each dollar of new tax resulted in $1.17 of new spending.  

            To see the full article, visit www.wsj.com.

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