samuel3578
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samuel said:People will aim at higher revenue in normal situation. If the government cut tax, will they spend money and help recover the economy?
To individuals, even if the taxes being cut, they may not spend money if they think the future is pessimistic. The cost for spending is higher than what than the benefit. It cannot help the economy. Rich people may use money to invest oversea. It cannot help economic recovery. Actually, it is common for those people to invest oversea.
To businessman cut tax can reduce their cost, but it does not equal that they are willing to employ more people or increase investment. If they found employer can finish works, there are no reason for them to employ more people even the tax are cut. It cannot help to decrease the unemployment rate.
Cut tax is also a cost to country. It is an explicit expenditure to nation. In long term, the government income decrease, it increases the difficulties for them to repay those debts. Everyone care for our revenue, so it is a must for us to against the government to raise taxes at that time. Take a look at Greek. It may create other confident cries that time, such as the debts may slow down country economic cries. It is not suitable for a country with large amount of debts to cut tax.
In most of the situation, market is the most efficient way to allocate resources. However it is the situation that the resources should mainly focus on recover local economy, even they may not be most efficient. That’s why the government current policy and plans for build more role, having more government lead economic plan are most suitable. Republican suggestion is not the best way to help economic recovery.
Conversely, would that mean Deomcrats always suggest taxing more and spending more will help the economic recovery?Republican always suggests cut tax, reduce market intervention to help the economic recovery.
Why not?Theatrically let the market allocate resources is the best, however, under the situation nowadays, it may not true.
To individuals, even if the taxes being cut, they may not spend money if they think the future is pessimistic.
Apple has apx 25K workers "over seas". They have about 25K workers in the US. "Designed in California, Made in China". Who's going to buy the 900 dollar made in USA Ipod? If there were not iphones, ipads, ipods, would Apple have 25K employees in the US?Rich people may use money to invest oversea. It cannot help economic recovery. Actually, it is common for those people to invest oversea.
If I want my company to GROW, it takes increased capital. If my company does not hire more people, then I need to have more technology which means buying things from other people who may hire more people. I ship more, I need more boxes which are produced by people... If you look at invididual companies which do not hire more people, if they are going to grow, it requires more money to be put into the system. It requires more orders. It requires YOU to have more money to buy MY products. I may or may not hire the individual, but the increased commerce will lead to more jobs as somewhere along the transaction lines there will be shortages which need to be filled. The more people working, the more people spending, the more tax revenue is collected via both sales tax and income tax.To businessman cut tax can reduce their cost, but it does not equal that they are willing to employ more people or increase investment. If they found employer can finish works, there are no reason for them to employ more people even the tax are cut. It cannot help to decrease the unemployment rate.
Lets agree on 2 things. First, a tax of 0% would not produce income for the government because there would be no income. Second, a tax of 100% would not produce income for the government because there would be no incentive to have a business or go to work because no one works for free.Tax cut is also a cost to country. It is an explicit expenditure to nation. In long term, the government income decrease, it increases the difficulties for them to repay those debts. In long term, the government income decrease, it increases the difficulties for them to repay those debts. Everyone care for our revenue, so it is a must for us to against the government to raise taxes at that time.
The greek problem exists because one, they did not have a long term balanced budget plan. Two they are not able to print their own money. If there was a Greek currency, then there would be no problem with Greece paying it's debt, but they must rely on other countries in the EU to provide the increased money supply.Take a look at Greek. It may create other confident cries that time, such as the debts may slow down country economic cries. It is not suitable for a country with large amount of debts to cut tax.
Republican always suggests cut tax, reduce market intervention to help the economic recovery. Theatrically let the market allocate resources is the best, however, under the situation nowadays, it may not true.
People will aim at higher revenue in normal situation. If the government cut tax, will they spend money and help recover the economy?
To individuals, even if the taxes being cut, they may not spend money if they think the future is pessimistic. The cost for spending is higher than what than the benefit. It cannot help the economy. Rich people may use money to invest oversea. It cannot help economic recovery. Actually, it is common for those people to invest oversea.
To businessman cut tax can reduce their cost, but it does not equal that they are willing to employ more people or increase investment. If they found employer can finish works, there are no reason for them to employ more people even the tax are cut. It cannot help to decrease the unemployment rate.
Cut tax is also a cost to country. It is an explicit expenditure to nation. In long term, the government income decrease, it increases the difficulties for them to repay those debts. Everyone care for our revenue, so it is a must for us to against the government to raise taxes at that time. Take a look at Greek. It may create other confident cries that time, such as the debts may slow down country economic cries. It is not suitable for a country with large amount of debts to cut tax.
In most of the situation, market is the most efficient way to allocate resources. However it is the situation that the resources should mainly focus on recover local economy, even they may not be most efficient. That’s why the government current policy and plans for build more role, having more government lead economic plan are most suitable. Republican suggestion is not the best way to help economic recovery.
Probably, although it might not be ideal. The problem exists when government tries to supersede the role of funding situations that fall through the cracks of market failure and attempt to put their fingers in as many pies as they can.
Government spending for the purpose of economic recovery is incredibly short-term. Excessive public sector expenses ultimately lead to stagflation and skewed market wage equilibria that causes inefficiencies. Look at Greece. They're a great example of what happens when you eliminate wage competition on a national scale and perpetuate New Deal-type crap on far too large a scope.
Outsourcing catches a lot more flak than it deserves. First of all, international investment only doesn't assist in economic recovery if you judge wealth based on GDP, which is not always an accurate meter. Second, usually only one or two segments of the supply chain involve overseas. Production may occur overseas, but what about distribution-based costs? Marketing/advertising? The vast majority of value-added segments create domestic revenue and local jobs.
This is only true during this administration. Tax cuts granted by the Obama regime did not loosen corporate coffers because it offered absolutely no assurity or confidence that he wasn't about to gut-punch them. History has shown that through Reagan and Clinton administrations, treasury money became a lot more loose, which was a driving factor behind recoveries involved in those time frames. Corporate infrastructure and technological easements created a lot of boons for Clinton to hang his hat on, even if he wasn't directly responsible for it. History will judge him very favorably for things that, essentially, he was no part of. The greatest thing Clinton did in his administration was that he didn't trip over his own feet. Even though increasing the capital gains tax to almost double what it was stifled things a bit, he skyrocketed off of the private sector doing its thing.
It's astonishing that you view Greece in a positive light. Most of Europe is a shining example of what not to do. What we call a massive unemployment crisis in America would be the status quo for most European nations. When you have countries like Greece, Germany, and Ireland with consistent unemployment in the teens and even low 20s at times, the easy (and wrong) solution is for government intervention to go and patch up all these holes in the dam - easily ignoring that more holes come to the dam when you fix those. Europe's AD/AS (that's aggregate demand and aggregate supply) curves are laughable when compared to those of America or southeast Asia. Their mixed economies and "tax first" mentality is what keeps them barely above water.
And here you lose me totally. You will never see me push for resource allocation that is deliberately inefficient.
Conversely, would that mean Deomcrats always suggest taxing more and spending more will help the economic recovery?
Why not?
Also if you have 5 dollars more in your pocket, you may or may not spend it. If you don't have 5 dollars in your pocket you will NOT spend it.
Apple has apx 25K workers "over seas". They have about 25K workers in the US. "Designed in California, Made in China". Who's going to buy the 900 dollar made in USA Ipod? If there were not iphones, ipads, ipods, would Apple have 25K employees in the US?
The benefits of the US economy are felt due to advancements made "over seas". Imagine a world where there was no investment in other countries. How much would you pay for a gallon of gasoline, or any other product which was manufactured in the US. The reason you can go to walmart and save money is because of these over seas investments.
If I want my company to GROW, it takes increased capital. If my company does not hire more people, then I need to have more technology which means buying things from other people who may hire more people. I ship more, I need more boxes which are produced by people... If you look at invididual companies which do not hire more people, if they are going to grow, it requires more money to be put into the system. It requires more orders. It requires YOU to have more money to buy MY products. I may or may not hire the individual, but the increased commerce will lead to more jobs as somewhere along the transaction lines there will be shortages which need to be filled. The more people working, the more people spending, the more tax revenue is collected via both sales tax and income tax.
Lets agree on 2 things. First, a tax of 0% would not produce income for the government because there would be no income. Second, a tax of 100% would not produce income for the government because there would be no incentive to have a business or go to work because no one works for free.
On the one side as you increase taxes, the government will increase revenue, and on the other side as the government decreases taxes it will increase revenue. If you can see how the that works then you can understand on why finding the optimal balance is important for sustainability.
Next, if you expand on what you just learned above. An economy with 100% taxes will have very little commerce, and an economy with 0% taxes would have the most commerce possible. As taxes increase, commerce transactions are slowed. In times of economic hardships, it is important to reduce taxes to assist in stimulating commerce. In the good times it is important to increase taxes to recoup the expenses from the previous downturn in the cycle.
As for the second part of the quote, it is important for the government to have a long term balanced budget plan, and not be concentrated on what each individual year is. There will be good years and bad years. Long term.
The greek problem exists because one, they did not have a long term balanced budget plan. Two they are not able to print their own money. If there was a Greek currency, then there would be no problem with Greece paying it's debt, but they must rely on other countries in the EU to provide the increased money supply.
Can't we just wait until overextended consumers trim their spending and increase their savings to the point where they are comfortable spending again? I mean, isn't that how a business should pursue confidence, as well as the individual?
Can't we just wait until overextended consumers trim their spending and increase their savings to the point where they are comfortable spending again? I mean, isn't that how a business should pursue confidence, as well as the individual?
Sure, that should work - as long as consumers don't "trim their spending" right out of a job (which is largely what has happened during the past 3 years). If they loose their jobs because they aint spending, then how the heck are they ever gonna save? And if we ain't employed and aint paying income tax, then how is our gov gonna fund itself?
Yes, eventually, even if the government did absolutely nothing, the situation would correct itself, but it could take a decade or more. Do we want to have to deal with a "lost decade"?
A net debtor nation caught in a "productivity trap" would be a most damaging development. Would you hire an engineer, nurse, programer, etc... who has been out of the industry for a few years?
Yes, eventually, even if the government did absolutely nothing, the situation would correct itself, but it could take a decade or more. Do we want to have to deal with a "lost decade"?
A net debtor nation caught in a "productivity trap" would be a most damaging development. Would you hire an engineer, nurse, programer, etc... who has been out of the industry for a few years?
What are you basing that estimate on?
But what of the recessions before the Great Depression? None of those lasted as long as what we're talking about now or the Great Depression.
Here is the NBER record of the business cycle dating back to 1854:
Source: National Bureau of Economic Research
In the period 1854 - 1919, there were 16 cycles, which averaged 48 months from trough to the previous trough ('trough-to-trough') and 49 months, to the peak from the previous peak ('peak-to-peak').
What are you basing that estimate on?
imagep said:Next month will start our 4th year of bad times, and it looks like we still have many more to go.
It is also interesting to note that recessions have become shorter lived on average, with longer periods of growth between them since inheritance tax and income tax were established, and again after WW2.
Interesting that you would connect those 2 dots. Out of all the possible connections you link taxes... Consider this Germany has a tax rate at 42% > 52K EU, there is also a VAT of 7 to 19%, . This year, Germany has reached the lowest level of unemployment in about 20 years, 7.5%. We in the US are up in arms with unemployment at 9%. Germany has AVERAGED 8.5% unemployment over the last 2 decades. If higher taxes are the key to prosperiety, howcome Germany is only equal to us in employment, AND the worker productivity is much lower than the US worker. In other words, the US workers in Germany would further increase German unemployment.
Just wondering, howcome there is such a disparity if you think taxes fix everything?
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