In my mind, Optimal Tax Policy is what results in the largest overall amount of taxes going to the Government over the long term. That sounds counterintuitive, if not blasphemous, to tax hawks, but think about it. Lower rates increase tax revenue, but only to a point. If the Government were to simplify taxes and lower the rates, they would receive as much or more as they do now. If the Government were to look at the long term, they would be motivated to keep tax rates as low as possible, while still paying off debt as quickly as possible.I don't think we need to worry about the situation about paying off our debt too quickly such that we would need to lower rates beyond the tax maximization point, at least in the short term.I disagree. I don't think maximizing the size of government (which is what we are really talking about) in the short run OR long run is optimal. I think the optimal level of taxation is *far* below long-run tax revenue maximization.The optimal tax policy raises the absolute minimum amount of tax revenue necessary to fund government functions to protect our individual rights, and it does so with a minimal amount of economic distortion. In other words, tax consideration of potential courses of action is minimized.
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