The Residential Real Estate Crash Index Message Board

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Strategies & Market Trends : The Residential Real Estate Crash Index

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To: stockid who wrote (24814)	10/26/2004 1:38:14 AM
From: GraceZ	Read Replies (3) of 306849

The only countries that have the "balls" to try a completely different tax system (like a flat tax) are those like Russia, that have suffered the worst from Socialism/Communism and are desperate to get out of that Hell hole. Here and in other industrialized countries with large entrenched entitlements there are too many groups that have a vested interest in simply attempting to steal as much as they can from some other group. The real problem with Socialism is that it always leads to inefficient allocation of resources, especially human resources. If the state subsidizes incomes by taking away from the high producer and giving it to the low producer it effectively makes it less painful for that low producer to remain in a low wage job. In a free market economy, a job has a market value, if a certain job attracts too many people than the wage for that job will fall, too few and it rises. This market adjusting mechanism makes people seek out and work to train themselves for more profitable ways to make a living, to look for those areas of the economy which have to pay more in order to attract workers. The very worst aspect of Socialism is that it prevents this simple market adjusting mechanism from occurring because with the best of intentions people vote to try to take some of the pain away from those with low skill, low wage jobs. The same distortions and misallocations occur when whole industries are subsidized directly. Tax schemes which take money from high wage earners and direct it to low wage earners essentially do the same thing that direct subsidies do, they subsidize whole industries that employ unskilled low wage workers. Without the tax benefits bestowed on these low wage workers, the various industries would have to pay a higher wage in order to attract employees or employ more labor saving technology or employ capital equipment which compensates for the employee's shortfalls or finally move to a country which has a lower cost of living.

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