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re: On a dollar basis, taxation does not hurt nor benefit an economy
Posted on 9/29/14 at 3:24 pm to HailHailtoMichigan!
Posted on 9/29/14 at 3:24 pm to HailHailtoMichigan!
quote:
The vast majority of taxation goes, eventually, into the pockets of people that will spend it.( people on state aid, government employees, etc). This money eventually goes right back to the businesses that pay for it.
Similar to the broken window fallacy.
quote:
It is a net zero on the functioning of the economy. If the taxation was not there, a firm will have the money. If the taxation is there, a firm will lose the money for a short period of time, but will gain it back through consumers.
Dum.
1
Posted on 9/29/14 at 3:26 pm to CherryGarciaMan
Production and expansion requires one of two things: demand, or lower production costs. The former is achieved through taxation. What kind of business owner doesn't expand when he gets more money from consumers?
Posted on 9/29/14 at 3:28 pm to HailHailtoMichigan!
quote:They do lose money. The capital taken does not get invested in their business. Your analogy could work if capital paid an immediate return. It doesn't.
Again, all I am saying is that it is a dubious claim that taxation hampers business growth, because that business will not lose a dime in the long run.
Posted on 9/29/14 at 3:29 pm to Taxing Authority
quote:
Malinvestment is a real thing. If you want to generate wealth, you have to spend capital on economically productive pursuits.
So another overly simple example. You have two companies A and B.
Company A is more productive as they are able to make 9 widgets for a $1; while B can only make 8 widgets for a $1.
But since Company A has more profit, they are taxed more. Even worse, the government program (for whatever reason) helps Company A and B equally (probably through some sort of government buying program). You can even envision a scenario where Company B gets MORE than Company A (small business or economically depressed areas). Thus you are transferring money from a company that spends them efficiently, to one that does not. That means less widgets produced and/or sold = smaller economy.
But wait! you say, what if the government program went to widget consumers? Thus the companies make their money back! But you still disadvantaged the more productive company which drives up the cost of widgets for everyone = less productive economy.
Posted on 9/29/14 at 3:29 pm to Taxing Authority
quote:In the short run. Long run, consumers will return it.
They do lose money.
Posted on 9/29/14 at 3:30 pm to HailHailtoMichigan!
quote:Nope. See BigJim example.
In the short run.Long run, consumers will return it.
This post was edited on 9/29/14 at 3:31 pm
Posted on 9/29/14 at 3:36 pm to HailHailtoMichigan!
quote:
Again, all I am saying is that it is a dubious claim that taxation hampers business growth, because that business will not lose a dime in the long run.
This is even more absurd than the original post.
Posted on 9/29/14 at 3:40 pm to HempHead
Where is the money going, hempy?
Posted on 9/29/14 at 3:45 pm to HailHailtoMichigan!
Taxation will be by definition an inefficient allocation of resources.
That said, civilized societies have decided that taxation provides utility by providing those services the populations wants to be provided by the government. Those common services reduce transaction charges signicantly.
That said, civilized societies have decided that taxation provides utility by providing those services the populations wants to be provided by the government. Those common services reduce transaction charges signicantly.
Posted on 9/29/14 at 3:47 pm to HailHailtoMichigan!
It can go any number of places, perhaps back to the respective business, but I think it far more likely to be spent elsewhere. There is no guarantee that the business will get the money back.
Posted on 9/29/14 at 3:59 pm to HailHailtoMichigan!
quote:
It is a net zero on the functioning of the economy.
Sure... if you assume that efficiency has no effect on the "functioning of the economy."
You're on shaky ground making that assumption, and I'm being charitable by putting it that way.
Tigah In ATL describes our collective rationale pretty well- opting for taxation despite knowing its harmful effect on efficient allocation. (Although I disagree with him that the effect/motivation is a necessary reduction in transaction costs- I think the proper motivation is stepping in where market failure typically pops up.)
This post was edited on 9/29/14 at 4:00 pm
Posted on 9/30/14 at 11:06 am to HailHailtoMichigan!
You don't understand capitalism.
When the citizens keep their money, the same people who were brilliant enough to create money and jobs by creation of a business, can with said money create more jobs, and more money with less taxation.
On the other hand, more taxation leads to, more graft by politicians and artificially higher prices in ALL THINGS FUNDED BY GOVERNMENT.
It also leads to money being placed in the wasters hands, people that spend the same tax dollars that creators of jobs should have, on bull shyt like Obama phones etc.
When the citizens keep their money, the same people who were brilliant enough to create money and jobs by creation of a business, can with said money create more jobs, and more money with less taxation.
On the other hand, more taxation leads to, more graft by politicians and artificially higher prices in ALL THINGS FUNDED BY GOVERNMENT.
It also leads to money being placed in the wasters hands, people that spend the same tax dollars that creators of jobs should have, on bull shyt like Obama phones etc.
Posted on 10/1/14 at 5:11 pm to 90proofprofessional
quote:How is taxation harmful for efficient allocation? Allocation happens in the investment world. What does that have to do with shifting money around through taxation?
- opting for taxation despite knowing its harmful effect on efficient allocation.
As a business, you are happy equally if you get a new sale OR if you get new investment. Without taxation, you'll more likely to see folks investing in your company, while in a tax scenario, you're more likely to see an increase in sales because someone who didn't have a dollar before now has a dollar.
Posted on 10/1/14 at 7:11 pm to HailHailtoMichigan!
Giving money to a central government and then begging for it back and received on their terms is not beneficial or efficient. The government doesn't provide for the services wanted by the consumer as much as by the government itself. Most wouldn't agree with borrowing 40 cents on the budget dollar, paying 252 billion dollars in debt service and then giving money to foreign entities as aid. The more control we have of our money the less abuses the government is able to project on citizens.
Posted on 10/1/14 at 7:13 pm to HailHailtoMichigan!
nope the govt spends money inefficiently
The losses from the inefficiency may as well be burned for all the good they do anybody.
The losses from the inefficiency may as well be burned for all the good they do anybody.
Posted on 10/1/14 at 7:18 pm to gthog61
quote:Government spending is really the act of government giving money to consumers, who THEN spend the money. How is that any different than if the taxation never happened in the first place?
nope the govt spends money inefficiently
Posted on 10/1/14 at 7:40 pm to HailHailtoMichigan!
quote:
Allocation happens in the investment world. What does that have to do with shifting money around through taxation?
Are you seriously asking how "shifting money around" affects allocation?
That's pretty much the same as asking how re-allocation affects the original allocation.
Posted on 10/1/14 at 7:42 pm to 90proofprofessional
quote:How do you know that the people who had the money orignally are better at allocating it than the people who will receive the tax money? (NOT government, but gov workers, etc.)
That's pretty much the same as asking how re-allocation affects the original allocation.
Posted on 10/1/14 at 7:50 pm to HailHailtoMichigan!
quote:
How do you know that the people who had the money orignally are better at allocating it than the people who will receive the tax money? (NOT government, but gov workers, etc.)
The reallocation is costly, first off. Efficiency (economic or otherwise) is very low on the priority list for government spending. This alone is easily sufficient to falsify the thread title.
But on top of this, a great deal of our spending is on happens to be on things that hamper investment. That necessarily implies lower long-term growth. Again, this is not controversial. It is undergrad macro.
ETA: it should be obvious why the second paragraph shows that the costs of taxation are huge (as they are compounding and their effect is therefore self-sustaining) while the consumption benefits you tout are not- they must be continually funded, or the consumption boosts stop when the consumption subsidy stops. But the effect on growth (via investment) has a permanent effect.
This post was edited on 10/1/14 at 7:54 pm
Posted on 10/1/14 at 7:53 pm to HailHailtoMichigan!
quote:
The vast majority of taxation goes, eventually, into the pockets of people that will spend it
Then why don't we just go to a federal sales tax?
The rich buy more so they would still pay more in taxes. But this way everyone would pay their share including the drug dealers with their 20" rims to the illegals buying goods to live here.
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