The income higher earners will recieve from their job will be less than their overall portfolio value. Namely their pension, savings, capital investments, property value etc. The economic growth the increase in consumer consumption the taxation flip trick will lead to will secure the overall portfolio value of investors, so in the whole grand scheme of things the wealthy benefit.
Maybe I'm missing something but with all due respect what is novel or new here ? The pros and cons of this type of structural change in the tax system is covered in every Economics 101 class ever taught.
There's a mechanism in terms of spending habits, lower earners spend a greater percentage of their earnings, higher earners save a greater percentage of their earnings. If low income earners have more money it will lead to an increase in purchases and in turn economic growth. Higher income earners will benefit from investment return if economic growth is achieved. By losing a small amount of income through taxation to the low income earners, higher income earners can benefits more in terms of investment returns. The income lost through the increase in taxation for the higher income earners is nothing compared to the need to maintain overall portfolio value, pensions, savings, captial investment, property value etc. It certainly isn't woth losing economic growth over a 1% income tax rise.
No way. After hearing it clarified I stick to my point. Taxation is a net negative. It disincentivizes work. Btw sig. I believe in Austrian economics and gave studied von Mises and Rothbard for many years. I'm am possible I'm not educated in your Interventionist and statist economic theory. Nor do I want an education n it. The way your command your statements sounds almost facist in nature... Your condescending and authoritarian in tone. Which makes sense considering the stance your supoorting
I feel it should be given more precedence in terms of actual use. I am looking to achieve economic growth in a constrained environment, in this case where taxation has to be maintained to hit national debt repayments. True spending habits and the rate of taxation have been used before to increase economic growth, however was it as a result of having little choice due to the restrictions high national debt creates. After all a certain amount of income has to be received to repay the debt. Also there is the issue of pay disputes, the technique used ensures pay rates are maintained for low income earners and prevents strikes and other pay actions. The way the economy is set up with high debt, requires economic growth year on year to prevent debt default. Economic growth really has to be attained to ensure principal based debt obligations can be repaid. Even a small rate of economic decline can cause a lot of debt default, which will devalue portoflio investments like pensions.
The taxation has to be taken to repay the debt. All I can think of your response is you believe governments should not take taxation. The debt they owe is made up of people's life savings and pensions. If the money is not paid back then they will lose some of their stock investments. You say you don't want taxation, which means you don't want national debt but then you might as well say you don't want government bonds or even private banks the government had to bailout. You would lose a lot if the government did not take taxation especially in terms of what you already own. Your overall stock value savings, pensions, capital investments, property value, car value, paintings etc. There is also the currency value issue, where the currency value falls, meaning you can't purchase goods from abroad at the same low price leading to inflation. This happens when banks collapse and national debt is not repaid.
Listen, you need to be able to string at least two coherent sentences together before anyone can begin to have a conversation with you. To address what I think you may be trying to convey: As of now you know nothing of my thoughts on economic theory, only that I believe one shouldn't pontificate on something they're woefully ignorant about! Apparently that extends to any economic theory besides the one you believe to be true. That you could come to conclusions about how wrong all alternatives are while refusing to learn about any of the alternatives also says a lot!
On another note this is how economics really works. Political will pushes the economy to the brink and macroeconomists like me have to develop new products and techniques to work around it. Do I want to have to develop techniques to maintain economic growth whilest repaying high levels of national debt, no. I didn't want there to be high national debt in the first place. I also didn't want banks to collapse but they did. With the economic situation I have been presented with and knowing the consquences of not having economic growth let alone economic declince, especially in a highly geared principal investment based economy, I have been left with little choice.
I agree with sss12 that this is pretty standard liberal orthadoxy for at least the whole time I've been following politics and had learned enough about the various economic theories to think intelligently about them (25 years more or less). In the U.S. at least.
It is a small loss to make in terms of income, when the overall portfolio value is taken into consideration. Look at the points I make below. In a highly geared economy if economic growth is not maintained and national debt is not repaid it will punish you badly. See below. The taxation has to be taken to repay the debt. All I can think of your response is you believe governments should not take taxation. The debt they owe is made up of people's life savings and pensions. If the money is not paid back then they will lose some of their stock investments. You say you don't want taxation, which means you don't want national debt but then you might as well say you don't want government bonds or even private banks the government had to bailout. You would lose a lot if the government did not take taxation especially in terms of what you already own. Your overall stock value savings, pensions, capital investments, property value, car value, paintings etc. There is also the currency value issue, where the currency value falls, meaning you can't purchase goods from abroad at the same low price leading to inflation. This happens when banks collapse and national debt is not repaid.