Harmor wrote:
Maybe reducing taxes and making it a hospitable place to risk their investments they'll start doing what they do best...and create wealth.
You don't get more money when you raise taxes. You're violating the 5th principle of Reaganomics and assuming that the economy is static - its not.
Taxes are going up and the uncertainty of regulations (i.e. Obamacare), is looming around the corner.
I'm about to buy a business in Orange County that and would hire 10 new employees by October, but I'm having second thoughts right now because of everything that is happening.
All economic indicators are down right now. Why should a business want to risk their capital now?
Or maybe its simply that there are a bunch of GOP supporters holding back their investment for political reasons.
Anyway, here's where reaganomics falls off of the rails, with the lower taxes = growth... because lower taxes do not generate growth when you are running a deficit... the lower tax incentive just becomes a shovel that's digging a deeper hole and burden that has to be repayed later... and its the height of stupidity to lower taxes when you are running huge deficits. btw increasing taxes does not grow the economy either, but it does create a more stable economy, but not if you are running a deficit to do it.
have you ever notice how similar the words deficit and defecate are?
But here's what I think about the crap that's going on right now...
When you talk about managing the economy, what we need to do is discuss taxes in absolute terms, not in relative terms. The problems we are having in the economy are that "incentives" and "loopholes" and "different rates" are used to create artificial imbalances between actors in the economy. And actors in the economy plan their investments and business strategies with tax planning and tax avoidance. It sad that providing incentives to one business and not another can mean that one business is getting screwed with their own tax money because a competitor is getting "incentivized" and being given an advantage over the other. Just think how much better off we would be right now if the Bush tax cuts had never been passed and if we had continued to run surpluses from clinton's presidency.
Taxes should not be relative, whether taxes are 15% or 50% is irrelevant if everyone is paying the same and that includes people in all types of businesses and in all types of investments and to all people in the past years and in future years. What is important is that there has to be equal treatment and stability in the tax rate so that people can't play find the loophole or bribe the senator for an incentive or a "reaganomic" tax break. With the expiration of the bush tax cuts, I'm sure that there are people out there who think that they should sell this or that to avoid taxes, and others who are holding back investment. The problem with that is that these people are acting rationally to maximize their investments, the problem is that the system is irrational. The problem we have is that the tax rate is not stable over the long term and people are playing games and hedging and lobbying and betting on regime change to tilt the game their way and its becomes the politicization of taxation. If the tax rate were stabilized or fixed over the long term, then we wouldn't be having these problems with people being unsure of whether or not to invest.
Like Truq said, you need to cut spending. To follow that up I would add that if you have a long term fixed rate of taxation that's more or less permanent, you do away with incentive crap and create a level playing field for everyone and everyone knows the game, and you adjust spending according to the govt revenues actually coming in... then IMO you would go along way to having good, sustainable management of the government and the economy. In that line of thought, may be this country needs to constitutionalize a fixed rate of taxation and do away permanently with incentives... and throw in a balanced budget provision too... because its obvious that immaturity, greed and selfishness rule wall street and capital hill. Congress really has become a money making machine for certain groups in favor with the ruling party, we really need to shut that down and put them to work providing us with good management of the govt and the economy. As it stands now, everyone is a game player and everyone wants an
incentive free lunch and a risk free sure thing.
