The world wide capacity of making chips is about $250 B, this year production will be about $188 MM, that is the easiest part of excess capacity, however (a lot of the "decline is falling prices, not units). But, take for instance the capacity to produce cars, if memory serves, it is around 80 MM/year with demand in the range of 55 MM world wide (numbers from memory and you are welcome to correct these). In aluminum, O'neil had to strike a special deal with the Russians to reign in some of their capacity, and plants are closing all over the globe (might be good for those still producing here, but they prefer to sell the power they have contracted for long term rather than make aluminum <g>).
As for consumers, I would guess that 60% of that windfall will go into consumption, the rest to rebuild balance sheets, not a bad start.
As for corporate income taxes, I did not know that was even on the table, but if they lower it from the current 35% to a rate under the top of individual tax payers bracket, I can see a lot of CPA busy incorporating all those in the high tax bracket just for tax reasons, into sub chapter C corporations.
Last, the telecommunication market, somebody got to pay for all these new wonders, if the consumer is tapped out, who will pay for it?
I don't know what is the best bracketing of personal taxation, but fooling around with it every time a new party gets to control the government causes unnecessary dislocations. What I do expect, however, that if we are going to continue and run surpluses much in excess of 1% of GDP, we will prolong, not shorten the current problems in the economy.
Frankly, one innovation I would love to see, is the elimination of that tenet that SS is not a tax, it is a tax of 15.3% on those earnings 85,000 (I think that is the new number...), it could be lowered to probably 10% or less if it was not capped, and then, I would agree that lowering the higher brackets make sense, tight now, those in the 39% bracket pay a lower marginal federal taxes than those in the 28% bracket. What is "fair" with that?
Zeev |
