i kinda like cutting taxes...after all isn't it considered a bad idea to make drastic changes when you are in a time of crisis? I was just wondering what everyone else thought.
Provided we are talking about a free market economic model and that the country is at least moderately industrialized. The whole idea behind the free market is its unrivaled efficiency and it yields incredible amounts of information about the real value of commodities. Taxes are inefficient. With taxes, price no longer equals cost, which means cost no longer equals value. Example: 10% sales tax. Price of cappuccino in perfect free market: 90 cents Price of cappuccino after taxes: 95 cents Consumer willingness to pay for cappuccino: 90 cents Cappuccinos sold: zero Taxes raised: zero
Everyone loses.
More taxes = Less efficiency More efficiency = better economy Better Economy = WIN
It's also odd that you would advocate the free market due to increased efficiency. Free markets breed monopolies, who characteristically profit maximise, rather than producing at a productively efficient level.
Taxes are inefficient.
Without taxes and at least small scale government intervention, there is no method to correct market failure.
More importantly however, without taxation and fiscal policy growth economic growth dies.
Your example of cappuccinos is flawed. For one thing, because the price of a cappuccino is so small relative to your income, a consumer would likely be unpeturbed at even say a whole dollar's increase.
In a broader sense, the example you use is incorrect because every single item is taxed. Consumers take into account the entire value of a product when they choose to buy it, and that includes the added tax.
Of course there are some cases where unnecessarily high taxation does seriously disrupt an industry, but this is a rare occurence.
Consumer willingness to pay for cappuccino: 90 cents
[quote]
Provided we are talking about a free economy and what not, by cutting taxes NOW in the USA as an example the only thing that would be achieved is not being able to pay off our enormous debt and people who don't have the money to buy coffee still not buying it. Where are we getting with that? Its not like our economy has stopped. We're not sitting at a standstill, We're GOING PLACES. We just need to get there faster, I personally see Tax Cuts as fail. Taxes suck to people but to the economy as a whole they are worthwhile, not to mention without them the government cannot do anything to ever support the economy or make plans of its own.
you look at any unbiased report of the Great Depression, it'll tell you one of the best things done was the pass of things like the AAA and WPA which created jobs (many of them were created) for a long time. one of those constructed dams, including the Hoover Dam. we could use them to construct more dams, or windmills. not only would it provide jobs for a long time, it could increase the amount of money our gov't gets off of land, or could lead to less costs to the householder, which would benefit the economy LOTS because people would spend the money they wouldn't spend on energy bills.
Price of cappuccino in perfect free market: 90 cents Price of cappuccino after taxes: 95 cents Consumer willingness to pay for cappuccino: 90 cents Cappuccinos sold: zero Taxes raised: zero
oh yes, because one extra nickel is absolutely unacceptable in any situation.
Tax cuts are the way to go here.
Oh yeah, it's just that in the past, stimulus dollars have always worked better in the real world. Besides that minor problem that stimulus dollars always end up working better, tax cuts totally work better. :P
Price of cappuccino in perfect free market: 90 cents Price of cappuccino after taxes: 95 cents Consumer willingness to pay for cappuccino: 90 cents Cappuccinos sold: zero Taxes raised: zero
Also adding to this:
Cappuccinos are an inferior good, meaning that a small jump in price still won't budge consumers from buying the good. It will have to take a large price increase for people to stop buying cappuccinos.
But again, this proves only one item out of millions XD
To inferior goods, small jump won't affect anything. To normal goods, a small jump may stop them from buying from the company totally. It just depends what the item is.
Incorrect an inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. When your income rises you buy more capuccions when your income decreases you buy less. Capuccino is not an inferior good, it just does not cost very much,
Say it my good man say it, because most of the time it is what I'm thinking...
Okay.
TAX CUTS!!!
We need to spend less to get out of this. Once we can get a certain amount out, THEN maybe we can succeed in stimulus plans. It just won't work now, or I'll be paying for it because a bunch of idiots couldn't stop building cities in the middle of the Arizona desert, 60 miles from the nearest major city.
Once we get to a decent point, where the government can sustain itself with less taxes, it will have more money to spend on economic stimulus. I'll be willing to pay a 3-5% increase on yearly taxes and maybe an 8% on income, but I will not pay more. Not when the government can cut $100,000,000,000 out of its' budget of uselessness.
