It is counter-intuitive, but has been proven time and time again: If the United States federal government has a revenue problem, it can increase its income (over time) by lowering tax rates. This is acknowledged by honest politicos on the left and the right—including Democratic idol, President John F. Kennedy (D) who lobbied during his presidency for lowering taxes to fund government programs and improve the economy. “Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income,” Kennedy said, “as to yield within a few years an increased—not a reduced—flow of revenues to the federal government.”
This works because lowering the tax burden leads people to do one of two things: Some put more money into savings; some spend. Whichever people do, they are helping the economy with that money. Money spent on goods and services enriches businesses, which then can pay their employees more, hire more employees, or buy more products and services from others. As this propagates through the economy, it reduces unemployment and increases incomes, which increases tax revenue for the government. Even money put in savings accounts provides more investment dollars for the banks that fund capital improvements and investment spending across the economy, leading to similar results in a different way.