well let's put it both ways; the worst crash in 80 years was able to move revenue collection as a percent of GDP 25% off of it's historical mean, or 4.5 points of GDP.
though it occurs to me that the massive increase in transfer payments during those years also contributed to that decrease of revenue. if you inveset 100 Bn into a new company, that money is going to be spent in all manner of ways that are taxed. If you invest 100 Bn in bonds which is then used to inject liquidity into the financial system, the effective tax revenue generated is zero.
no, only historical ones. if we were to decrease tax rates to where we
aimed at less than than 18% of GDP, then we would probably see shift in that direction. but as of yet we have not done that.
which is why I would say we need to
aim our collection efforts at about 19% of GDP, and our
spending at 15%. the remaining (average) 3-4% of GDP collected can go to pay down debt, then to build an emergency fund (with some tough dang glass; supermajority of Congress and a Presidential signature at least).... and then we can reduce the tax burden further.
that's the basic theory behind the Laffer Curve. at 0% tax rates you collect $0. at 100% tax rates, you also collect $0.
