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  1. #71
    Order Now! pure_mercury's Avatar
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    Get rid of income taxes entirely and move to consumption-based taxation, excise taxes, a flat carbon tax, and user fees. Cut defense significantly, scotch Obamacare, and means test Medicare. Change the SS cost-of-living increases to a more accurate/less generous pegging. Cut all corporate subsidies and eliminate the most ludicrous discretionary elements in the budget, and go on a nationwide waste and inefficiency elimination hunt at all level of government. It can absolutely be done, even with revenue neutral or lowered.
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  2. #72
    null Jonny's Avatar
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    Quote Originally Posted by pure_mercury View Post
    Get rid of income taxes entirely and move to consumption-based taxation, excise taxes, a flat carbon tax, and user fees... It can absolutely be done, even with revenue neutral or lowered.
    You say this with a great deal of certainty, which means that you must have a sophisticated understanding of the effects of such a policy change. Would you explain to me that understanding with reference to changing to a consumption based tax system?
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  3. #73
    Senior Member Survive & Stay Free's Avatar
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    Quote Originally Posted by Jonnyboy View Post
    You say this with a great deal of certainty, which means that you must have a sophisticated understanding of the effects of such a policy change. Would you explain to me that understanding with reference to changing to a consumption based tax system?
    Nice

  4. #74
    Senior Member wildcat's Avatar
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    Quote Originally Posted by pure_mercury View Post
    Get rid of income taxes entirely and move to consumption-based taxation, excise taxes, a flat carbon tax, and user fees. Cut defense significantly, scotch Obamacare, and means test Medicare. Change the SS cost-of-living increases to a more accurate/less generous pegging. Cut all corporate subsidies and eliminate the most ludicrous discretionary elements in the budget, and go on a nationwide waste and inefficiency elimination hunt at all level of government. It can absolutely be done, even with revenue neutral or lowered.
    Why, I hear the purest West Virginian accent when I read this sermon!
    A woman spoke this pure West Virginian in the telly .. what is odd is she is not from West Virginia.
    She is from Idaho, or someplace.
    She lives in the north, very very north, with Santa and the polar bears.
    A neighbour of the Russkies. A tea-potter, or something. Wears glasses and all.

  5. #75

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    I need some furhtere clarifications.

    Quote Originally Posted by Jonnyboy View Post
    Yes, at least to the extend that they can offset any changes in interest rates due to decreased savings. What reason is suggesting is that the interest rates will be driven up by the decrease in savings from the wealthy, but an inflow of monies from the central bank will drive interest rates back down and essentially offset the decrease in savings.
    What sort of "inflow of monies" are we talking about? Printing more? Does that not lead to inflation?

    Which interest rates are we talking about? The rate at which you can borrow money from the central bank, seems like just an arbitrarily fixed number. The relationship between this interest rate and the nominal interest rates that individuals are offered by retail banks, I am unsure about.

    Quote Originally Posted by Jonnyboy View Post
    There is a notion in Keynesian economics that once interest rates reach a particularly low level that the effects of monetary policy in stimulating the economy are nil (the liquidity trap), but what this is essentially saying is that as interest rates i approach zero, the change in investment I with respect to i approaches zero. So dI/di < 0 and the lim dI/di as i->0 is 0.
    Again, which interest rates are we talking about?

    Also, at first glance, this seems at odds with your first point. You seem to be saying that the ability for monetary policy to increase I by decreasing i goes to 0 as i approaches 0 (which it is doing now).

    But in your first point, you say that montary policy can increase the investment portion of GDP back up through monetary policy.

    The only way I can interpret this that makes some sense is that you believe Reason was saying that decrease in savings leads to increasing the nominal interest rates (for individuals borrowing from retail banks, I mean), and that an "inflow of monies" will lower those same interest rates.

    However, I am skeptical of this claim. I am also skeptical of Reason's claims. But I am open to well-reasoned explanations for either set of claims.

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  6. #76
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    Quote Originally Posted by onemoretime View Post
    Where are they going to go?
    Where they're being squeezed less...and make profits there

  7. #77
    null Jonny's Avatar
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    Quote Originally Posted by ygolo View Post
    I need some furhtere clarifications.

    What sort of "inflow of monies" are we talking about? Printing more? Does that not lead to inflation?

    Which interest rates are we talking about? The rate at which you can borrow money from the central bank, seems like just an arbitrarily fixed number. The relationship between this interest rate and the nominal interest rates that individuals are offered by retail banks, I am unsure about.
    The central bank lends money to banks, who in turn lend out to businesses and consumers; thus, any interest rate changes which occur as a result of this theoretical decrease in savings will be offset (these new monies take the place of the lost savings). You are correct in your assumption that, in the long run, this will lead to inflation. Monetary policy will in the short run stimulate the economy, but in the long run production will return to its 'natural level'.



    Quote Originally Posted by ygolo View Post
    Again, which interest rates are we talking about?

    Also, at first glance, this seems at odds with your first point. You seem to be saying that the ability for monetary policy to increase I by decreasing i goes to 0 as i approaches 0 (which it is doing now).

    But in your first point, you say that montary policy can increase the investment portion of GDP back up through monetary policy.

    The only way I can interpret this that makes some sense is that you believe Reason was saying that decrease in savings leads to increasing the nominal interest rates (for individuals borrowing from retail banks, I mean), and that an "inflow of monies" will lower those same interest rates.

    However, I am skeptical of this claim. I am also skeptical of Reason's claims. But I am open to well-reasoned explanations for either set of claims.
    I'm sorry, I included that bit of information to reinforce and clarify your understanding that you presenting in response to my first post. However, note that so long as interest rates are held constant, the effects that changes in interest rates have on investment is a moot point. Monetary policy affects interest rates which in turn affect investment. So, even though lower interest rates may not stimulate the economy to a significant extent (or at all), I was simply noting that any increases in interest rates due to decreased savings which ***might*** lead to decreases in investment can be offset via monetary policy before they have any effect at all on investment.



    My response to reason was targeted specifically at his notion that the very wealthy are not taxable because any gains from that taxation would be offset by losses in the investment sector. I'm not sure if he was talking about short term tax increases or long term tax increases, the latter would require a different analysis and specific information regarding which sector those tax revenues would be spent (redistributed to lower income families via a decrease in their taxes, used to fund government spending, etc). Such an analysis would require specific numbers as to the amount of taxation, and the corresponding effects on savings and investment, and whether the decreases in public sector investment would be sufficiently offset.
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  8. #78
    Dreaming the life onemoretime's Avatar
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    Quote Originally Posted by Tantive View Post
    Where they're being squeezed less...and make profits there
    Sure about that? Nothing's stopping 'em right now.

  9. #79
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    Quote Originally Posted by Jonnyboy View Post
    You say this with a great deal of certainty, which means that you must have a sophisticated understanding of the effects of such a policy change. Would you explain to me that understanding with reference to changing to a consumption based tax system?
    There are a couple of elements to recommend this step. First of all, taxing income is, by definition, not the best way to encourage growth (i.e., the better you do economically, the more the government takes). So, long-term, you should see slightly better GDP growth all other things being equal. Secondly, the radical simplification of the tax code should save a lot of money on that end (the IRS budget could be much smaller, corporations wouldn't have to spend unnecessary millions on accountants, tax attorneys, and lobbying for tax breaks/subsidies). Perhaps most importantly, the truly goofy corporate income tax system in the U.S. (highest or second-highest in the industrialized world, yet a gigantic corporation like GE is a net recipient of tax money, not payer) would be eliminated, and many corporations would repatriate the lost revenue we drove away to countries with lower marginal corporate rates. The FairTax plan is one such consumption tax system, and you can read more about it here:

    http://en.wikipedia.org/wiki/FairTax

    http://en.wikipedia.org/wiki/Predict...of_the_FairTax


    A land value tax system would probably be the least market-distorting, but I have some doubts that such a system could be implemented smoothly at the federal level. I do support a citizens' dividend when the tax authority takes in more than the government's expenditure and debt servicing, as well.


    P.S. I forgot to include the phasing out of the mortgage deduction in my earlier recommendations. I am sure many would try to lobby for some type of rebate for mortgages under a consumption tax system, but I would not be in favor of any such loophole.
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

  10. #80
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    Quote Originally Posted by wildcat View Post
    Why, I hear the purest West Virginian accent when I read this sermon!
    A woman spoke this pure West Virginian in the telly .. what is odd is she is not from West Virginia.
    She is from Idaho, or someplace.
    She lives in the north, very very north, with Santa and the polar bears.
    A neighbour of the Russkies. A tea-potter, or something. Wears glasses and all.
    Uhhhh. . . yeah. Sarah Palin? I'd like to see the clip of her advocating cutting ALL corporate subsidies, cutting defense significantly, and moving to a consumption tax rather than an income tax. Or are you just tripping on mushrooms and typing online again?
    Who wants to try a bottle of merc's "Extroversion Olive Oil?"

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