Every society grapples with the question of what is the scope of government in the functioning of the society in general and economy in particular. Questions about what is the right size of government are mostly a moral question about what kind of society we ought to have. As a result, discussion on this issue tends to be very passionate. About half the US electorate subscribes to the theory of small government and claims to exercise their vote at least loosely along those principles.
One could have a “big” government, that has high tax rates and spends a lot on various socio-economic programs. Or one could have a “small” government, which taxes little and does little. Depending on one’s ideal vision of society, one alternative can be better that the other. However, most folks would agree that it doesn’t make sense to have a government that is small in terms of its tax collection, but big in terms of its spending. Unfortunately, in the US, the political reality is that the only part of government that one can cut is the tax collection. So let us, for now, concentrate only on the right way to cut tax revenue.
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