Video: First and Secondary Consequences of Taxes

"Economics, as we have now seen again and again, is a science of recognizing secondary consequences."~~~Henry Hazlitt, Economics In One Lesson

What would happen if the current income and estate tax rates stayed the same?  That is, what first and second consequences would ensue from not raising taxes?

Americans would do one of three things with their un-confiscated property.  Any of these would be a first consequence of not raising taxes:

1. Spend it
2. Save it
3. Invest it

And then there are the secondary consequences of not raising taxes:

1. If spent, un-confiscated property contributes to economic activity.   That's good in a recession
2. If saved, un-confiscated property adds to capital accumulation which makes more capital available for lending, thus increasing credit availability.   That's good in a recession.
3. If invested, un-confiscated property contributes to capital investment without which broad economic expansion cannot take place.  That's good in a recession.

If government decreases the amount of property it allows Americans to keep, all three of these opportunities expire. That's a consequence of raising taxes and that's not good in a recession.