A final irony of excessive government spending is that it works perversely to lower government revenues, by slowing economic growth. By balancing the budget through spending restraint, we allow future generations to enjoy more government services. The Republicans in Congress have presented a budget of historic significance. For the first time in recent memory, Congress proposes to balance the budget and cut taxes at the same time. Finally, a majority of legislators recognize that Washington demands too much of the resources and time of ordinary, working Americans.
All taxes reduce economic growth.
People seek to avoid taxes. The actions they take to avoid taxes means that they will reduce income-producing activities. They will work fewer hours, invest less, or hide income if the costs of taxation are too high. Economists have studied the burden of taxation and have estimated that every dollar raised from taxes reduces income from 17 to 56 cents. The evidence of the benefits of lower taxes can be seen in three tax cutting periods in the 20th century.