To lower tax revenues, Hong Kong will lower tax rates

You see, Hong Kong has a problem virtually no other country has - booming tax revenue. And they did it with low tax rates. So, they want to reduce tax revenue, by reducing tax rates. If you read this space often this should come as no surprise, even though this seems to be at odds with The FDC's argument to cut tax rates to increase tax revenue. But it's not. Let's take a look at the good ol' Laffer Curve (above). Hong Kong is clearly in a different situation, in regard to tax rates, than the US. Hong Kong already has low tax rates (16% salaries tax and 17.5% corporate tax) has seen the benefits of high tax revenue as a result of those low tax rates. Therefore Hong Kong exists on the left side of the Laffer Curve (above). On the other hand, the US (with higher tax rates) exists on the right side of the Laffer Curve. Therefore, if the US were to lower tax rates further, the likely result would be more tax revenue instead of less.

Hong Kong's finance minister is preparing to cut the salaries and corporate rates 1% each.

H/T: Drudge

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