Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : THE SLIGHTLY MODERATED BOXING RING -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (14606)	6/10/2002 2:44:38 PM
From: jttmab	Read Replies (1) \| Respond to of 21057

People at the bottom are not likely to be able to accumulate wealth unless they have jobs. Reducing the incentive to create wealth by increasing marginal rates reduces the number of jobs that are created. Reducing marginal rates will help the economy grow. Also I was talking about simplification as well as rate reduction. IMO simpler taxes will also help the economy grow. The lower and simpler taxes are the more people make investment decisions based on the return from the investment and the less they make them based on tax advantages. High and or complex taxes distort the incentives for investment to promote seeking tax shelters rather then seeking profitable and efficient ways to invest money for maximum return. In any case we were talking about people acumulating wealth. Once people's income increases and they start to accumulate wealth they pay the higher rates. High rates for the upper income brackets act as a disincentive to the effort required to accumulate wealth. That all sounds good, but does history bear out the story. I don't believe it does. All throughout the 90's there was a good healthy growth rate that coincided with the rhetorical highest tax rise ever; largely directed at the wealthy. There was still a healthy growth rate; the wealthy got wealthier [which is fine]; and there was low unemployment as well. Some economists would call 5% unemployment ideal, since it isn't inflationary. Any lower unemployment or any higher growth rate would have resulted in Greenspan jacking up interest rates to slow the growth. [Looking at his track record, that's a more than fair conclusion.] And what happened during the good times, did the savings rate go up? No, it went down. If you look at Western Europe which has higher tax rates, you'll find that the savings rate is higher than the US. I think the fair conclusion on the US, is that Americans are less patient about acquiring goods and services. It is not part of the American culture to save; the culture says buy. While your case sounds good, I don't think you can find historical support for it. jttmab