[nky]

Tax cuts increase government revenues because of the dollar multiplier. As citizens spend THEIR money it gets into the economic stream. Each time that dollar is spent the government gets a piece, as a result the government's revenue goes up. Think of it this way When Walmart sells something the government doesn't only get a tax on the store sale but they also get a piece when the raw material was proved, trucked to the plant, made at the plant, shipped to walmart. Think of all the people who touch that dollar in getting the product to Walmart and how many times it is taxed.

The reverse can be seen here in Kentucky. What happened when Kentucky doubled it's tax on tobacco?