With interest rate rises, the people in the most debt suffer the most. With tax rises, the highest paid suffer the most, and the govt has extra revenue to help the ones struggling the most. This is never considered by any govt. Why not?
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The government can’t actually raise taxes, they can only change the tax rate and that is a very crucial distinction.You can’t tax money that people don’t have so it’s always a fraction of what people’s income is.
Raising taxes means that people have less disposable income and less money to spend, which means that they can’t make as many investments or hire as many people or do things that stimulate the economy.
If taxes are raised too high then it will grind the economy to a halt and the government will actually make less money because their citizens have made less money.
If you make $100,000 in a year and you’re taxed for 20% of that, you’d be paying $20,000 in taxes. If you made 200,000 in a year but only paid 10%, that would be the same amount of money that the government is getting, but you would be better off.
Every action that you take economically has a trade off that causes someone to be deprived of money somewhere. Like with inflation, printing more money to try and pay for more programs devalues everyone else’s money and is essentially a hidden tax because printing more money did nothing to add more real value to the economy, because it wasn’t backed by real work.
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