Re: Refuting supply-side economics

From: William F Hummel (wfhummel_at_comcast.net)
Date: 09/29/04 

Date: Wed, 29 Sep 2004 18:41:54 GMT

On 29 Sep 2004 13:10:35 GMT, aft627@aol.com (Andy F) wrote:

>William F Hummel wrote:
>>
>>The bondholders gain nothing that they wouldn't have gained in some
>>other investment. If they had held their savings in cash instead,
>>they would have suffered an opportunity cost of at least 0.5 billion.
>>Bottom line: The interest earnings of the bond holders do not come at
>>the expense of the tax payers.
>
>But this year's taxpayers aren't the same as last year's. People who retire
>during the year will not have to pay for the borrowing.

People who retire during the year, assuming they have no tax
liabilities, would not pay taxes whether the government borrowed or
not. What is your point?

>Young people who start
>their first job , however, will be paying higher taxes even though they didn't
>benefit from last year's low taxes.

What do you mean by not _benefitting_ from last year's _low_ taxes?
Young people who start their first job will pay taxes whether or not
the government borrowed.

For a given level of government spending, those who benefit directly
are the government employees, the contractors, the workers they hire,
and whoever in the public can make use of the work. The cost of those
benefits will ultimately be borne by the tax payers, independent of
how it is financed.

>So rich old people are dumping a tax burden onto future generations.

This statement is nothing more than the envy-on-the-rich syndrome.
The tax burden is determined by government spending and the tax code.
It doesn't matter who owns the government bonds. If Mr. A buys US
Treasury bonds and Mr. B buys euro bonds, your thinking implies that A
benefits at the expense of US taxpayers, whereas B clearly does not.
But A and B are simply investing their savings in different bonds, and
doing so totally independent of who pays taxes. So why is A the fall
guy according to your logic?

Relevant Pages

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