Wednesday, January 7, 2009

Raising Tax Rates on the Well to Do: Lane Kenworthy Gets It

I have been arguing that cutting taxes for households who are not borrowing constrained will NOT increase aggregate demand. Lane Kenworthy takes this argument one step further:

It’s unlikely to delay economic recovery by reducing consumer spending, since most of those affected will still have sufficient income to be able to spend as much as they desire. The tax-rate increase is small enough that it should have little or no adverse impact on investment; when the rate was 39.6% in the late 1990s, investment didn’t suffer. And the added tax revenues could be used either to boost the size of the stimulus package or to reduce its impact on the federal deficit.

Well said!

1 comment:

TheTrucker said...

Why is it not evident that the taxation of economic rent will have no adverse affect on the economy. The argument for reducing the progressive taxation (which is primarily a tax on unearned economic rent) is that the "private sector" will do a better job of "investing" than the government will have done. The stupidity proclaims that supply creates demand. That is crap. It has not worked and will not work. We have more imported lip gloss than we can use and any "investment" is still going offshore and creating tax revenues for some other country. When will this stupidity stop?

We need IMPORT TARIFFS even more than progressive tax increases. But the stupidity continues because the people of this nation have been purposefully mis-educated. They have been led to believe that taxes are a horrible dragon that is foisted upon them by politicians so as to keep the politicians in their commanding and comfortable circumstances. The truth is that the politicians are secured in their august positions by money from the business community.

And when "investment" in this tax jurisdiction is not being undertaken by those who are the beneficiaries of property rights enforcement on a global as well as domestic scale then we have what we see as huge deficits. I can think of no other way to properly address this malady than to either curtail that enforcement activities (allow China to copy Gate's software and sell it worldwide at $10 a copy), or collect the supporting taxes as import and export fees.

And now we will hear all that lying about Smoot-Hawley and how it "caused" the depression. That is the typical rightarded binary fundamentalist stupidity. No economist would recommend a 60% import tariff of anything. Yet, the need for import tariffs should be obvious.

The learned and august "economics profession" in their sucking up to the rich will screech "comparative and absolute advantage". Those are macro effects which do not provide any benefit whatsoever to the producing class and which inevitably work to the disadvantage of the vast majority who must have jobs (i.e. be producers) in order to prosper. So unless our learned economists want to be highly supportive of extreme progressive taxation in support of a welfare state then they are just a bunch of lying pigs in the pay of the rich.

The other issue that will require some real airing is the immigration issue and most specifically the H1B garbage. The supply of computer science people in this country is more than adequate to address current needs and has been since 2001. Yet there are still H1B's from India and elsewhere haunting the halls of corporate America simply because they work cheap and can be coerced by the threat of deportation and led by the nose through the promise of a green card. Let us say that they are highly indentured and servile. Even more profitable are those brown robots from the south. They require no direct maintenance (health care and pensions) and when they wear out they are easily replaced.

If the Democrats do not address these issues they will be removed from office just as they were removed in 1994. The sane people will stay home in 2010 and the rightarded lunatics will return the Republicans to office.

And at the fundamental level we need classical economics and civics as requirements for a high school diploma.

OK, Democrats.... Show me some game.