It may be the dismal science, but the basics are more or less right, in that it predicts what happens when you don't play by the rules.
Itt appears hard to follow the rules, as constant twiddling with it by money supply trickery at the Fed does not seem to stave off financial disaster. The why of this is that the don't pay attention to reality. The trouble is two fold. Laffer curve disbelief, which is dangerous, and Pseudo Keynesian economics. People believe what Keynes proposed, that massive spending my governments when times are hard will pull us out an economic slump. Keyne's conjecture has never actually been proved. The tendency of government's to spend freely at any time, pretending to follow the Keynesian path and not to inflate has not been disproved either. Keynes based a lot of his gold denial theory on wanting the paper pound to dominate world exchange, allowing merry olde UK to win the international dominance game. It was the US dollar's turn however to fulfill this role. Keynes being a paper pumper seems to fly in the face of classical economics, which inherently warns against too much money printing as sowing the seeds of disaster.
The trouble with all attempts by governments to reduce taxes and boost economy is that they do too little to really count. That and the majority of expenditures are locked in, and supported by a basically bad economy that disenfranches the great unwashed lower labouring class. The don't encourage people to hire people, as government regs and taxes at all levels make it impossible to develop industry based on domestic labour. At ten dollars an hour the US worker has no compettive chance. Societies like Ireland and Norway proved Laffer's contention that lowering taxes would provide a massive boost to economies. The US simply has too many entitelment expenses, layers of tax and lacks the Cojones to follow this model in any real way.
if you factor in income tax, VAT tax, state taxes, Royalties and Federal taxes, the US takes over 65% of every buck spent in the US. Democrats say it is heresy to raise taxes over this heinous rate.
In fact the government gets 100% of every buck spend in the US. Or more. Let's examine it.
Everything that everyone buys to make anything has corporate tax and income tax and fuel tax factored into it. The fuel has income tax, corporate tax and government royalties as well as wellhead and pump taxes factored in. When the fuel company buys rigs, pipe, trucks etc, and transports stuff it the companies they use and make the stuff pays road tax, and these companies use fuel which in turn has all these levels of tax, like a dog chasing its tail. I am getting dizzy, factoring it.
It should be apparent that since everyone uses fuel who uses electric power even, or who buys things that are trucked, or flown, they are paying the fuel company's layers of tax whose prices in turn are based on the supply company's prices which are based on the fuel company's prices for their highly taxed product. This integration has to run over 100% eventually. I can't see how it can't.
Let's say fuel is 60% direct tax resulting from wellhead, pump, corporate, employee income, road, excise and state tax. Let's say there are seven layers of supply to the fuel company, steel, service, exploration, all of which use 25% of their costs as power/fuel. The remainder of the suppliers/exploration/service costs include transport, materials, labour This comes to 60% of the fuel supply company's costs. The remainder of their price is influenced by labour, (30% tax) wellhead, pump, and state royalties. Mark up has to give an IRR after corporate tax.
Even when you mail a letter you are paying tax. |
