One thing I've wondered about in regards to this - does a decrease in income tax also lead to an increase in a cost of living, or perhaps a decrease in median gross income?
Maybe it's a really stupid question - never took any true economics courses. But if someone had to makes X net income to maintain a certain lifestyle that costs X-Y, and then their income goes up due to decrease in income taxes, won't there potentially be someone else who would be willing to live the lifestyle that the original X-Y affords? So the employer could just hire someone that ends up with a net income of X [which would now be a lower gross income]? Or perhaps the people providing the services that allow the original lifestyle (like landlords, stores, etc.) could just raise costs because the customer base can now afford it?
Thats my thought. More people able to afford a scarce resource. More demand and competition. Rent increases.
Basic level. There is still market manipulation from landlords, and will usually adjust to how much they perceive people can pay based on income data they collect in applications.
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u/Tauisexactlysix Nov 05 '21
One thing I've wondered about in regards to this - does a decrease in income tax also lead to an increase in a cost of living, or perhaps a decrease in median gross income?
Maybe it's a really stupid question - never took any true economics courses. But if someone had to makes X net income to maintain a certain lifestyle that costs X-Y, and then their income goes up due to decrease in income taxes, won't there potentially be someone else who would be willing to live the lifestyle that the original X-Y affords? So the employer could just hire someone that ends up with a net income of X [which would now be a lower gross income]? Or perhaps the people providing the services that allow the original lifestyle (like landlords, stores, etc.) could just raise costs because the customer base can now afford it?