Re: LVT dustup over at AngryBear

"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote in message
news:cheqe1tet8g46pui3kc8gaprtmr0rugemv@xxxxxxxxxx
> On Sun, 31 Jul 2005 19:27:16 GMT, Folsom Inmate <nomail@xxxxxxxx>
> wrote:
>>
>>Supply-siders are wrong, there is no statistical correlation between
>>economic growth and taxation. Growth happens despite taxation. I believe
>>taxation spurs economic growth because the government always spends
>>taxes, which in turn disperses money among corporations, supply chains
>>and individuals, who in turn purchase goods and services, which
>>stimulates more hiring, spendings, taxing, and so on. OTOH, supply-side
>>economics concentrates money into few hands, drying up demand among the
>>lower-income population and ultimately causing economic contraction.
>
> I thoroughly agree. Supply side theory is based on the false belief
> that economic growth is dependent on the investments of the wealthy.
> Accordingly, taxes should not bear too heavily on those in high income
> group. In truth there is an enormous pool of funds comprising the
> savings of the broad middle class -- pension funds, mutual funds,
> insurance companies, finance companies, and so forth. They are all
> seeking good investment opportunities. Furthermore, banks can issue
> credit money limited only by a multiple of their own capital. No
> recessions since WW2 can be traced to a shortage of investment funds.
>
> Tax revenues don't disappear into a black hole. They are a part of
> the reciprocal flow of funds between the government and the private
> sector. Government spending spurs economic growth if the funds are
> used to provide essential services and to improve the infrastructure.
> Even boondoggles have an upside. They support aggregate demand, which
> is not a bad thing when the economy runs well below its potential.
>
> We've known that demand is the key since at least the days of
> J.M.Keynes. Economic activity and growth is greatest when purchasing
> power is broadly spread, as it was in the 20 years following WW2.
> That means the broad middle class should be taxed at the lowest
> possible rate. The downside to high tax rates on upper incomes is
> that it spawns an army of lawyers and accountants working
> (unproductively) to create tax shelters and to work Congress for
> special deals in the tax code.

The most egregious "special deal" was a flattening of the
income tax. And the "loopholes" are designed to encourage
risk taking and real interest pursuits as opposed to rent
seeking.

> The maximum rate should never again be set as high as it once was, but
> I think the tax burden should be shifted towards the upper income end.
> For the past couple of decades, there has been little or no growth in
> real purchasing power in the lower 4 quintiles, while the upper
> quintile has been running away with the wealth. That's very unhealthy
> for the long term, politically as well as economically.

A return to the tax code of 1978 would be about right.

--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org


.

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