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Originally Posted by stevo
There is no federal sales tax. When someone buys a $5,000 TV the federal governments gets $0 from the sale.
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While that's technically correct, it's not the entire truth. The federal government does not make any money off any single consumer transaction, but they do tax profits and income all the way up the line, from the retailer to the distributor to the manufacturer. It's a more effective way without having the headache of tracking every single transaction. If people start spending more, the federal government most certainly gets their share, although there are some very good ways to minimize that amount.
The problem with the tax cuts that we saw in 2001 and 2002 is that they weren't significant enough for the wealthy or middle class to make any changes in their spending habits. There's some proof that "trickle-down" economics does work, but on a much smaller and slower scale than was predicted in the late 70's and early 80's.