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"A crash driving down input factor prices is actually a great opportunity for new entreprenuership"...
and a lower tax base + incentives are very helpful in incubating that entrepreneurship. In a boom that follows, higher tax base + lowered incentives help bring in revenue to support mitigation/softening of the next crash + help to reduce the magnitude of the bubble growth before it bursts...
but that said, wild fluctuations in eg tax rate are not wise. a way to manage this + avoid structural deficits is a contingency reserve with strict rules associated...
one might enjoy high volatility. the rewards can be greater. So is the risk... it's that risk/reward trade off... I'm not keen on too much volatility, if that wasn't already clear...
James...
posted by 216.59.2...
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