So ancient_geezer's prescription for Economic Happiness is to just RAISE everyone's wages. LoL. If only.
Business prices would be lowered only by the payroll taxes not paid and that will be nowhere close to 30%. So prices will rise with the implementation of FT.
Consumer electronics price reductions fit quite well into the economic models we have. NONE of those reductions had anything to do with tax policy. They are all consistent with the Export cycle bringing in new sources of competition and economies of scale coming into play as the industry matured.
Your worst case scenario is not even close to what I foresee which is wages going up but prices going up more. At any rate companies select outputs to maximize profits and that will not change under FT. They would select the same point of production since maximum After Tax Earnings are achieved at that point whether we are taxed at 38% or 0%.
While the desire for transparency is laudable we are still faced with the fact that many pay no income taxes and they will essentially pay no sales taxes after the rebates etc. are implemented. This means the drive to spend other people's money will still dominate domestic politics. And it is a singular irony that it is in the higher income and higher taxed locales which are most supportive of bigger government and higher taxes.
So ancient_geezer's prescription for Economic Happiness is to just RAISE everyone's wages. LoL. If only.
Interesting how you take the hypothetical scenario and claim it to be my position, That my friend in out of context as well as an attempt to raise a strawman.
The point of my reply being reduction of tax related overhead costs on business is the occasion for increased efficiency and productivity resulting in rising purchasing power for the household, how ever it may manifest, whether it be in price reductions, implementation of technological improvements in production of product, increased wage, return on investment to the stockholder/retirement account, and/or any combination of the forgoing.
Consumer electronics price reductions fit quite well into the economic models we have. NONE of those reductions had anything to do with tax policy.
Tell us then, what is the difference in reduction of costs from a tax relief from reduction in cost from other factor that make a difference in how that the savings in reduced costs will be applied in the quest of highest profit?
Your worst case scenario is not even close to what I foresee which is wages going up but prices going up more.
On the basis of what? Manufacturing and business overhead costs fall with the removal of the tax system currently in place misdirecting resources into economically sterile activites taking away from productive capacity.
At any rate companies select outputs to maximize profits and that will not change under FT.
Obviously, and they maximize profits by striving to find that equilibrium price that yields greatest profit, not highest possible price or wage in competative markets.
They would select the same point of production since maximum After Tax Earnings are achieved at that point whether we are taxed at 38% or 0%.
You are overlooking the fact that a change in how tax is collected is what actualized reduction of overhead costs, not changes in tax rate. Repeal of the tax system results in lower overhead by removing the misallocation of resources into non-productive tax related activities.
The increase in overall purchasing power of the individual (wage earner, investor etc.) arises from the reduction of overhead costs, as the tax revenue burden on the economy remains constant in a revenue neutral tax reform. It is the reduction of tax related overhead associated with the system replaced that gives rise to increased purchasing power by fostering more efficient and productive utilization of production facilities and resources.
While the desire for transparency is laudable we are still faced with the fact that many pay no income taxes and they will essentially pay no sales taxes after the rebates etc. are implemented. This means the drive to spend other people's money will still dominate domestic politics.
You are overlook a simple factor that operates in human behaviour. It does not matter what the source of dollars coming in is, source is disconnected at the point of expenditure where the tax itself is visible. That visibility, sticker shock for lack of a better term is the dominant factor that will drive voter percptions, not the fact that it may all net out in the wash.
And it is a singular irony that it is in the higher income and higher taxed locales which are most supportive of bigger government and higher taxes.
More often that not said locales are also the haunts of inherited wealth more than earned wealth. The latter folks remain accutely aware of the burdens extract from them. The former will indeed not change much in there ingrained habits and often guilt/status driven concerns to support the causes of government, not to mention they are also often the same folks who are inimately enmeshed in the halls of government to the point where government growth is seen as advancement of there own power and fortunes.
Fortunately that group also represents a very small sector of the voting population and their main hold in power in government is their ability to have dominant say in policy in the face of apathy and and fostered ignorance of the general electorate that has been possible under the current income/payroll tax system:
| "As a matter of fact, what the income tax does — and this is the debate that I think we always try to get into in order to let you and him fight, see — and the people of this country are led down a path where the actual control of their resources, which in the end is the control over their will, is handed off to the government." . . . "The government then manipulates that will in order to destroy the freedom of our electoral system through the income tax structure, and we call the resulting slavery a free system." "In point of fact, it is not as the founders understood, and the only way to restore real freedom is to give people back control over the income that they earn so that they won‘t, at the voting booth and in other phony issues, be subject to that manipulation." |