Do you people feel its right for the government to set very high tax rates while also giving out very comfortable government benefits to their non-working population. *Cough* *Cough* Europe!!! *Cough* *Cough*
For example, I used to live in The Netherlands. My father made quite a big salary of 9,000 Euros a month. However, he lost 60% of his salary to taxes. That is 5400 Euros a month, leaving him with 3600 Euros!
I feel that these high tax rates destroy peoples incentive to work hard. When giving out quite comfortable government benefits (about 1200 Euros a month) to the non-working community will surely create a society full of lazy ^%!^@'s.
No wonder Europe is in its terrible condition today.
I've seen Singapore assaulted too much in magazines by authors from welfare states who claim our country neglects its poor to bear.
ive never seen singapore been published like that in in my country for a long time. singapore has been published the last many years as a state that is growing towards the western world type of living and is a fun place to go to on holiday.
I believe that taxes should be lowered to allow more people to increase their consumption (C), and hence move the Aggregate Expenditure curve of their economies, rather than sucking their money off through taxes.
Since you're speaking in Economics... How about this: Although you're arguing for a decrease in taxes, you are also at the same time in favor of increasing the deficit! As such, when you do increase the deficit, you drain money out of the supply of funds to be loaned out. This results in a crowding out effect by the government which results in higher interest rates and reduced investment by firms for prosperity in the future. A little counter-intuitive, no?
Furthermore, the government doesn't have to cut taxes to increase aggregate demand -- by increasing taxes and using that money to create government jobs/hire private workers would result in the same increase in aggregate demand you're arguing for, whilst slashing our deficit, and increasing aggregate demand and keeping the economy rolling.
The question of 'Cut taxes to boost spending or raise taxes to boost spending' is moot. One makes a deficit, the other fails to do so. But, the 'raising taxes' idea does lead to higher tax rates on all of us. At the current moment, the idea is to increase the tax rates on the wealthy.
If we did that, I don't think the world would end. Business would prosper as it always has, considering (In the US's case) that tax rates are at their lowest point ever since the last 50 years. Heck, if the US got rid of the Bush tax cuts here, the CBO projects we'd have no deficit by 2026 at current lousy economic conditions.
Tax rates must go down in order for business to continue to prosper. Corporate tax rate especially.
What makes you think that? The US has been doing this for years, and we've constantly been going further into debt. Half of the time because when we're in a good economic outlook, we spend a crapload of money on war. And when we're not, we still do.
Oh, and that article is from '93. A little too outdated, I would think.
It has became a by word or another name for Singapore. It's just one of the more famous ones.
Furthermore, the government doesn't have to cut taxes to increase aggregate demand -- by increasing taxes and using that money to create government jobs/hire private workers would result in the same increase in aggregate demand you're arguing for, whilst slashing our deficit, and increasing aggregate demand and keeping the economy rolling.
When you increase taxes, it gives people LESS money to consume more, consumption being one of the parts of NY, and for businesses LESS to invest with, investment being yet another part of NY. So instead of increasing AD, you might end up decreasing it. Furthermore, and expansion in government jobs might create political problems for people who see it as an expanding and cumbersome bureaucracy.
Furthermore, a deficit is usually considered neither a good or bad thing by economists. It just is a thing, and changes from case by case.
For example, a fiscal deficit is regarded by some as a positive economic event. For example, economist John Maynard Keynes believed that deficits help countries climb out of economic recession. On the other hand, fiscal conservatives feel that governments should avoid deficits in favor of a balanced budget policy.
It is harmful when:
If a current account deficit is financed through borrowing it is said to be more unsustainable.
Borrowing is unsustainable in the long term and countries will be burdened with high interest payments. E.g Russia was unable to pay its foreign debt back in 1998. Other developing countries have experience similar repayment problems Brazil, African c (3rd World debt).
Foreigners have an increasing claim on domestic assets, which they could desire to be returned at any time. E.g. a severe financial crisis in Japan may cause them to repatriate their investments.
Export sector may be better at creating jobs.
A Balance of Payments deficit may cause a loss of confidence.
So it all depends, and one cannot outrightly say whether fiscal policy is good or bad. To counter the crowding out effect a government can apply more supply side policies to shift the AS curve, whilst simultaneously shifting the AD curve for example.
It has became a by word or another name for Singapore.
thats almost like the germans still feel they are left behind in europe because of ww2. while every1 has already forgiven germany. they themself still feel the pressure.
you might think singapore still get called that. but it isn't.
