It discourages spending but it encourage saving (investment) which will boost economy. The money has to go somewhere. Spending is not the only place for money to go to.
I agree to a certain point, but too much spending is one of the reasons we are in the current mess. America as a whole has lost the ability to save for purchases. Instead we finance/mortgage everything even when we can't afford it, personal spending and debt has hit the melting point. We will have to return to a more fiscally conservative mode, it doesn't appear to be a choice by the way things are shaping up. If somebody wants something, they usually find a way to get it.
I'm not sure why this discussion has lasted so long in the "Economics" category since it's clearly a political discussion. In any case - Obama and Pelosi have put us into stage 7 and will drive us very quickly to stage 8: "About the time our original 13 states adopted their new constitution, in 1787, Alexander Tyler, a Scottish history professor at the University of Edinburgh, had this to say about the fall of the Athenian Republic some 2,000 years prior: "A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship." (emphasis mine - he continues...) "The average age of the worlds greatest civilizations from the beginning of history, has been about 200 years. During those 200 years, these nations always progressed through the following sequence 1. From bondage to spiritual faith; 2. From spiritual faith to great courage; 3. From courage to liberty; 4. From liberty to abundance; 5. From abundance to complacency; 6. From complacency to apathy; 7. From apathy to dependence; 8. From dependence back into bondage " Professor Joseph Olson of Hamline University School of Law, St. Paul, Minnesota... believes the United States is now somewhere between the "complacency and apathy" phase of Professor Tyler's definition of democracy, with some 40 percent of the nation's population already having reached the "governmental dependency" phase." (end quotation) The "tax cuts" to the 30% not paying taxes are actually credits and clearly a redistribution of wealth that are being voted for by people who determined they could vote money for themselves. It's the end of America's run as a democracy unfortunately
You make good points. Maybe a consumption tax will help us get off this 100% credit, financed mentality which leads leads to irresponsibility and ultimate degradation of society.
Oh wait! never mind. I forgot there were actual repercussions for people who screw people over in the so called "black market" your referring to. So i guess i shouldn't make the comparison. Sorry about that.
So would that be better or worse than all of those independent contractors and business men who don't report cash transactions under the current tax system? What about a value added tax, or a national sales tax? I absolutely hate the complexity of the tax system we have, and would prefer anything but. All of this tax talk by politicians is essentially nonsense anyway, unless they are going to talk about total tax burden which includes inflation (an indirect tax) due to deficit spending. It is the total tax burden that matters. In the latter respect recent Republican administrations (notably the most recent) have increased our total tax burden tremendously, and it looks as though it will stay that way well into the future no matter what is done with the income tax. The only way to reduce the total tax burden is to increase productivity or reduce comsumption and spending. (Getting the US off of what seems to be a permanent war footing would be a giant leap forward in this latter regard!)