However, if you’ve got to do one, then the other, I tend to go with cutting spending first, because then you have a little time to build up some surplus revenue that will help weather the storm during poor economic times.

However, as of late, I have been wondering the best plan of action for reducing government spending and taxation. Do you cut spending first then taxes? Or cut taxes then spending? I’m glad I’m not the only one who sees this as a conundrum.

Scenario #1 Cut spending, then taxes: It seems that if you cut spending first, you are still left with exorbitant tax rates on citizens which will still leave a large influx of unnecessary cash into the government coffers. You could then cut spending and issue rebate checks to the citizens, making sure they are well aware of the savings they will now be experiencing.

Scenario #2 Cut taxes, then spending: This seems to me to be the more rational of the options. If you cut how much is coming in, you will naturally have to cut how much is going out. It’s my opinion that by cutting taxes immediately, citizens would start seeing the changes in their own lives and wallets. Then once you have reduced the revenue stream, legislators will be forced to constrain themselves to a budget.

I am very intrigued by the Fair Tax. It is presented as a voluntary tax, which I like, but I’m not sure about the prebate aspect of it. I do think, however, that if government spending is drastically lowered, then any sales tax rate could be lowered thus having a huge impact on things people buy.

Of course with either scenario, I would anticipate all sorts of crying and carrying-on by the legislators because they no longer have control. It will be “what about the children” this and “old people are eating dog food” that, but in the end, when citizens of the county/state/nation see that they are back in charge, it should be smooth sailing from there.