Subject:
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Re: stuff (was: Art Debate Was: [Re: Swearing?])
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Newsgroups:
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lugnet.off-topic.debate
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Date:
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Thu, 20 Jan 2000 11:45:32 GMT
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Reply-To:
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lpieniazek@novera.com!AntiSpam!
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Viewed:
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2679 times
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Jasper Janssen wrote:
> > My claim is this: the more specific a tax is, or the more exemptions it
> > has, the more distortive it is, and the more it replaces pure economic
> > decisions with decisions that take into account the tax in effect.
>
> What is the reasoning behind this? Why is a 40% straight sales tax on
> everything less distortive than, say, a 5% sales tax except on food?
Left out an assumption, thank you, as usual, for not letting me get away
with one atom's worth of implicitness. Sigh.
Assume the same total revenue take. 40% across the board is surely more
distortive than 5% on everything except food (although you get into
fringe effects. Is a restaurant meal food or service, is wallpaper paste
mix food, etc etc..)
But (and I don't know if the numbers balance, assume they do) 4% across
the board, is, I claim, less distortive than 5% on all but food. The
latter incents food consumption slightly.
> > The US income tax, to this free marketeer, is particularly pernicious
> > because it is a maze of special cases, exemptions, credits and
> > penalties, and because the net result is that two people, making exactly
> > the same income, can arrange their affairs so that one pays a lot of tax
> > and the other hardly any.
>
> > But, broadly, if one MUST incent behaviours, what I would prefer to
> > incent would be production and what I would prefer to disincent would be
> > consumption.
>
> Why? Production without consumption == inflation. That's not a good
> thing.
Prove this assertion, please. I've heard it before and I do not buy it.
In fact, I have heard the opposite much more frequently (== DEflation
or depression) and I don't buy it either.
> Hmm. Strange. Economic theory and practice in the US has always been
> to encourage consumption, and let that do the work. It hasn't exactly
> been a big failure, has it?
Well, if you call extremely high credit card debt, instant gratification
as a mentality, and higher levels of personal bankruptcy than ever
before a success, I agree. Yes, it has had some positive effects but
again, I claim you get distortive effects at the edges.
--
Larry Pieniazek larryp@novera.com http://my.voyager.net/lar
- - - Web Application Integration! http://www.novera.com
fund Lugnet(tm): http://www.ebates.com/ ref: lar, 1/2 $$ to lugnet.
NOTE: Soon to be lpieniazek@tsisoft.com :-)
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Message has 2 Replies:
 | | Re: stuff (was: Art Debate Was: [Re: Swearing?])
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| (...) And I wasn't thinking straight, or I'd have known what you meant. (...) Yes. And...? (...) When there is production that is going unbought because money that would have been used for consumption (in addition to there being larger production), (...) (25 years ago, 21-Jan-00, to lugnet.off-topic.debate)
| | | Re: stuff (was: Art Debate Was: [Re: Swearing?])
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| (...) Actually, no. See, for example, any first year Macroeconomics text, for example Samuelson. Excess production (that is, more goods than wages) causes deflation. Excess consumption (that is, more wages than goods) causes inflation. Now, it so (...) (25 years ago, 21-Jan-00, to lugnet.off-topic.debate)
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Message is in Reply To:
| | Re: stuff (was: Art Debate Was: [Re: Swearing?])
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| (...) Any tax, across the board, incents some behaviours and disincents others. Broadly, there seem to be at least three classes of taxation, although there may be others. These are: Income - a tax on the production of wealth Sales - a tax on the (...) (25 years ago, 18-Jan-00, to lugnet.off-topic.debate)
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