How does government get money? Government gets money when the private sector makes money.
Government gets money when businesses can supply needed and wanted goods or services at prices the consumer is willing and able to buy.
Government's source of revenue is taxes. Taxes are collected primarily when goods or services are traded for money. The more often goods and services are traded for money, the more revenue is collected for the government. It is then in the government's best interest to ensure the free flow of goods and services in the market place.
Most businesses try to keep their prices low to capture the largest percentage of the market. Most businesses make their profit on volume not per item. A business makes more money because they produce more volume. If government would keep government costs to businesses low, government would make up for the lowered tax rates on volume of exchange of goods and services to money.
“It is a paradoxical truth that tax rates are too high and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now. Cutting taxes now is not to incur a budget deficit, but to achieve the more prosperous, expanding economy which can bring a budget surplus.”– John F. Kennedy, Nov. 20, 1962, president’s news conference
In a business friendly environment, businesses can create goods and services at a price the consumer is willing and able to buy. At the right price, goods and services are in high demand. The rapid rate of exchange of goods and services for money generates a good steady flow of revenue for the government. In other words, the more often money is turned around from goods and services to money to goods and services to money again; the more money government collects in tax revenues.
The rapid rate of exchange of goods and services for money creates more and more job opportunities. More jobs opportunities translate to more money in the pockets of the consumer. More money available to the consumer translates to more demand for goods and services, more jobs and a larger tax base, which translates into more taxes collected for the government.
The rapid rate of exchange of goods and services for money means that businesses can earn a good profit (incentive) on volume, keep prices low, foster demand, create jobs, create wealth and generate taxes for the government.
“Lower rates of taxation will stimulate economic activity and so raise the levels of personal and corporate income as to yield within a few years an increased – not a reduced – flow of revenues to the federal government.” – John F. Kennedy, Jan. 17, 1963, annual budget message to the Congress, fiscal year 1964
When an economy is booming everyone has more job opportunities. In a booming economy, the government collects more taxes for schools, police, firemen and other government agencies. In a booming economy that has plenty of job opportunities, there is less need for a welfare state. In a booming economy that has plenty of job opportunities, there are fewer financially desperate individuals that feel they need to resort to crime. In a booming economy that has plenty of job opportunities, there is less stress and people are happier, friendlier, and healthier and need less medical care. In a booming economy that has plenty of job opportunities, there would be less homeless people, fewer people losing their homes and less need for government.
Government gets money when businesses can supply needed and wanted goods or services at prices the consumer is willing and ABLE to buy.
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