rtwngAvngr
Senior Member
- Jan 5, 2004
- 15,755
- 512
- 48
- Banned
- #21
Originally posted by Reilly
No, you are right. That is one distinction, although I would phrase it differently. Nonetheless, the aim of both at fiscal stimulus is the same.
However, you are not considering a couple of points.
(1) Lower taxes on the wealthy are not as effective in a time of recession as they are in a time of boom.
Yeah. nothing's as effective during a recession, because of the the recession. Doy.
This whole chain while nice and logical, is not quite right. Maxxed out production is not the only thing that triggers new investment. Enough said. The rest of the chain is unsound after this faulty assertion/assumption.In a period of recession, where demand is low (because more people are concerned about their jobs and finances), production is rarely ramped up to 100%. Therefore, tax breaks to the wealthy are less likely to lead to direct business investment (creating more jobs, new plants, etc.) This is because there is not the demand for more production. Therefore, wealthy individuals are less likely to contribute a high percentage of each dollar received toward job creating investments. However, a tax break on middle and lower income individuals results in higher percentage of each dollar saved towards consumption, because these people have less ability to save (they have to meet current financial demands - i.e., buying a new washing machine, car, spending a little more on a vacation, etc.) Therefore, by providing tax breaks to these individuals, demand is increased overall, and investors will have more incentive to increase production to meet the new demand (which in turn creates more jobs).
(2) Gov't spending, by pumping more money to these same lower income individuals (even if through unemployment insurance) helps raise demand for goods as well, once again providing the proper incentive for private investment in plants and the like. Also, some of this money will likely be put towards education (i.e, college tuition), which does contribute to higher efficiency.
To one extent you are right. Well placed tax cuts, at the right time, can help spur innovation, which may lead to a more efficient workforce. However, investments in roads, bridges, education, scientific grants, etc. can also increase our overall level of efficiency.
The main concern with tax cuts, even if well placed (and the Bush tax cuts are not well placed), is that, combined with high spending, you just get large goverment deficits, which, besides have to be paid back with interest, cause government borrowing which crowds out private borrowing and investment. I agree that gov't spending is too high, but in light of this, tax cuts at the same time is dangerous.
Worry wart. Pshaw! There's nothing dangerous here. You're just mad that right wing policies work.
Yes. People having money to spend stimulates the economy, but just giving people money does nothing to develop they're work skills or cohesion and functional integration with the rest of the economy; they're effectively wards of the government plantation. So while handouts may stimulate the economy, it ruins character, and again, innovation, but this time at the individual level.
Tax cuts are the way to go at all levels, for everyone, and I mean tax cuts, not income redistribution and "tax return checks" for people who don't pay taxes.