Add This To The Pile
What are the effects of taxes on the economy? Prevailing neo-fascist thinking emphasizes the negative, and of course, to some extent, this line of thinking is correct. Taxes reduce gains and therefore discourage investment and spending, which are two of the biggest economy-boosters around. The laugher - ahem, Laffer curve clearly shows that taxing 100% of something's profit completely removes the incentive to undertake that something. (That tautology, by the bye, represents the sum total of the wisdom of that curve.)
Where the taxes go is so often left out of the debate that if "the economy" were "the temperature inside a rustic cottage" and "taxing and spending" were "collecting logs and burning them in the fireplace," the debate would center around the extent to which taxation was depleting our firewood supply (ignoring all the heat the "spending" produced).
The neo-fascist counters that the free market generates more heat than the government can. This is debatable, and like most real-life debatable things, is true some of the time and untrue at other times. Nevertheless, spending does heat up the economy to some extent, and it is unfair to examine taxes, as the Laffer curve does, as though the money simply evaporates.
What's more, if tax dollars go toward strengthening our country's safety net, i.e. the social programs that help the (temporarily and chronically) poor, then investment and spending are encouraged. This happens because the investor/spender is confident that if he loses in his investment or if he overspends, he doesn't end up on the street, penniless.
This is as much of an oversimplification as the Laffer curve. What's the best way to strengthen the safety net? is just as complex a question as What's the best way to collect taxes? Is the safety net best strengthened by fighting wars? Guaranteeing health care? Supplementing income? All good questions. But by only analyzing the negative effects of taxation, we miss half the point.
The neo-fascist emphasizes the need to cut taxes to increase revenue, but I think it's difficult to argue that we're on the right side of the Laffer curve right now. No, most tax-cutting advocates in the 2000s are those so rich that the safety net is of little concern to them, or are those who, on the advice of the super-rich, only look at half the story.
So add that to the pile of arguments that centrist politicians need to use to fight the Reagan-Bush-Bush machine that delivered us from the frying pan of '70s stagflation and into the fire of today.
Where the taxes go is so often left out of the debate that if "the economy" were "the temperature inside a rustic cottage" and "taxing and spending" were "collecting logs and burning them in the fireplace," the debate would center around the extent to which taxation was depleting our firewood supply (ignoring all the heat the "spending" produced).
The neo-fascist counters that the free market generates more heat than the government can. This is debatable, and like most real-life debatable things, is true some of the time and untrue at other times. Nevertheless, spending does heat up the economy to some extent, and it is unfair to examine taxes, as the Laffer curve does, as though the money simply evaporates.
What's more, if tax dollars go toward strengthening our country's safety net, i.e. the social programs that help the (temporarily and chronically) poor, then investment and spending are encouraged. This happens because the investor/spender is confident that if he loses in his investment or if he overspends, he doesn't end up on the street, penniless.
This is as much of an oversimplification as the Laffer curve. What's the best way to strengthen the safety net? is just as complex a question as What's the best way to collect taxes? Is the safety net best strengthened by fighting wars? Guaranteeing health care? Supplementing income? All good questions. But by only analyzing the negative effects of taxation, we miss half the point.
The neo-fascist emphasizes the need to cut taxes to increase revenue, but I think it's difficult to argue that we're on the right side of the Laffer curve right now. No, most tax-cutting advocates in the 2000s are those so rich that the safety net is of little concern to them, or are those who, on the advice of the super-rich, only look at half the story.
So add that to the pile of arguments that centrist politicians need to use to fight the Reagan-Bush-Bush machine that delivered us from the frying pan of '70s stagflation and into the fire of today.
posted by john at
12:06 PM
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