Bennett Pope, Chapter 4, Question 5

A passage I found interesting was the footnote about the difference between a raise in government tax revenue and a raise in government tax revenue compared to what it would have been without a change in the taxes. The difference is small, but profound. In the absence of a change in taxation rate, government tax revenue tends to rise. Say this amount that the revenue raises is a constant percentage (the book uses 5%). With a change in the taxation rate (whether it is higher or lower does not matter), the amount of tax revenue may increase from the amount before, while still being below the typical tax raise (in this case, <5%). This is a distinction one must make when analyzing the change in tax revenue relative to a change in tax rates. It is easy to get mixed up, or for politicians to glorify their "brilliant economic thinking," while in reality the change in taxes was ineffective.