Tax Cuts: Pure Economics

I recently partook of the Massachusetts tax free holiday. The 5% sales tax was removed, and Massachusetts residents went shopping.

"It's as much a psychological thing as it is economic," House Minority Leader Bradley H. Jones Jr. said.

No it is not! Is it any wonder Bay State Republicans are in the minority? It is quite simple: Prices go down, demand goes up. Take away a 5% sales tax, and the price of goods purchsed goes down. There is no feeling about it, it is not mental. Your receipt reads a number that does not include a 5% tax. There are real, actual extra dollars in your pocket. I wonder if he meant that by having extra dollars in your pocket, you feel good!

Politicians in Massachusetts are loath to admit that cutting taxes has a tangible economic benefit. Why? Question 1 looms in November. Eliminating the state income tax WILL have an enormous economic impact. Lower income taxes mean more actual dollars in residents' pockets. It is that simple. It will increase economic growth, it will create jobs, it will increase after-tax income. That will make Massachusetts residents happier. Maybe it is as much psychology.