good answer except there are very few products or services with inelastic demand. Plus the hypothetical I proposed implicity ruled out that answer... because I stated... when things are slow. in other words... when there is slack demand... hence not likely inelastic demand. == lets go back to what we know. britain recently raised taxes on rich... revenues went down. they axed the tax revenues went up. Romer... Obama's knows from his own advisor his proposal will not end up with revenue increase. bush cut taxes revenue went up. Reagan cut taxes revenue went up Kennedy cut taxes revenue went up After the mellon tax cuts revenue went up Cap spending cut taxes. keynes even told us... when your economy is stagnant you cut taxes and grow out of the recession. 1. bush the 1st raised taxes and the fed raised interest rates.
There is elasticity in taxes/fees as well. Mr smartypants do you know how Mitt Romney balanced the budget in Massachusetts? He raised fees like hell. He said he did not raise taxes but the fees take money out of the private economy just as taxes do except fees target different folks and different behaviors. He raised fees and government revenue went up. It is not just a question of economic growth, it is a question of unsustainable budget deficits. We can't go on with $1trillion a year deficits. You know what was the biggest problem with Greece? The problem was that it could not pay its debts. It defaulted on its loans and nobody would lend it a dime. When you get to a point when you can't borrow more it is game over. Much more important than unemployment rate or gdp growth. When you can borrow money you can put people to work digging ditches, when you can't borrow money you are screwed. Has it ever occurred to you that interest on federal debt is simply a deferred tax? Bush tax cuts will have to be repaid with higher taxes later down the road. Ronald Reagan's greatest domestic "accomplishment" was tripling the national debt. Tax revenues under his administration went up because the after shocks of Vietnam and Oil Embargos wore off coupled with an Oil glut. Republicans have absolutely NO credibility on economy. W was given a balanced budget and a mild recession. W destroyed the budget and handed Obama an "apocalypse now" recession. As to your original example, the are numerous ways of increasing profits when "action is slow" including better marketing. If sales were everything, we would have a black friday every day which is clearly not the case. Sales destroy your margins.
Yeah sure... extra govt spending in an economy mature as our is the reason why we had a tech boom which increased efficiency and an internet boom. It wasn't the investors who financed the internet back bone, or the venture capitalists who invested in companies who made the switches, it was not the phds... it was the govt clerks in the filing rooms and our uber governors and congress people who created amazon an cisco and microsoft and intel and juniper and corning and dell and sun and oracle and apple. Thank goodness for guys like govs Jerry Brown raising taxes and driving out business and jobs to texas. Only about a third of CA pays income taxes so lets raise them so more and drive out more productive people.. Causes taxes are what makes america hum. There is no doubt govt spending... the first part of it which provides for infrastructure, police and national defense can be useful. But the paying off cronies crap that Obama spent almost a trillion on... is almost total waste. I showed you that we got 1 dollars worth of gpd for every 2.43 cents worth of govt spending... or something ridiculous like that. Had he invested in bridges and roads, the energy grid or the internet backbone and dictated americans had to do the work... that might have been useful... But the dems were pigs and we lost. We just tired spending our asses off -- without tax cuts. It has led to a stagnant economy... teetering on recession. So now its time to examine the other variable... tax cuts.