These two topics cannot be discussed exclusively, they are interconnected.  Business Dictionary.com defines taxation as

A means by which governments finance their expenditure by imposing charges on citizens and corporate entities.

An example is also referenced on the same site “Governments use taxation to encourage or discourage certain economic decisions.  For example, reduction in taxable personal (or household) income by the amount paid as interest on home mortgage loans results in greater construction activity, and generates more jobs.”

The example given supports my argument that when speaking on taxation the economy should not and cannot be far outside of topic.  The Mortgage deduction used by millions of Middle Class Americans is a means to spur home ownership and increase economic activity.  Lowering the home owners tax liability on his/her income by reducing the person’s gross income by the interest paid on the mortgage reduces the total amount owed on income tax.

Did your eyes glass over yet??  In other words, you spent money on interest Uncle Sam is giving you a break on the amount you owe him because of it.

The same theory applies to business and there loopholes and deductions they get, all be that it seems they get many, many more.

There is an underlying purpose for taxation that all the deductions and credits point to but that many folks tend to forget.  Although taxation raises funds for the Government it is also a mechanism that the Government has at its disposal to regulate the economy.  Yes, I said, “Regulate the Economy.”  Raise taxes and people or businesses have less money in there pockets to spend which decreases economic activity.  Decrease taxes and people have more money in their pockets and they can spend more which means increases in the economy activity…

Regardless of the tax collection mechanism being Income or Consumption the mechanics of high or low do not change…