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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: goldworldnet who wrote (723559)	1/31/2006 2:41:43 PM
From: DuckTapeSunroof	Read Replies (1) \| Respond to of 769670

"Reaganomics espouses the kind of hybrid economics I’m talking about." 'Reaganomics' --- NOT a full-fledged school of economics, more like just a PR phrase --- seemed to be the standard liberal Keynsian economics (relying on government intervention to 'moderate' and 'manage' the business cycle) with just two concepts thinly layered on top: 1) the 'lesson' of the Laffer Curve that --- if an economy is heavily taxed to the point of being 'over-taxed' --- there is a marginal tax rate above which the marginal propensity to work is REDUCED by greater then one with every increment of additional taxation... thus, beyond that point, higher taxes would actually reduce government revenue because people would either work less, or escape taxation into the underground economy. Consequently, as taxation RISES toward that marginal rate, the amount or revenue that is raised by every increment of additional taxation is gradually reduced. (Note: there is NOTHING controversial about this concept. It falls well within the bounds of 'conventional wisdom'. The only problem becomes determining WHERE specifically a nation is on the curve. Note also that ONLY at that one exact point where marginal propensity to work is reduced on a one-to-one basis with every dollar's increase in taxes can one say that a dollars reduction in taxes will not reduce revenue. At any point below that marginal rate [the 'left side' of the curve] the reduction of a unit of taxation will return only a fraction of that same unit in revenue... while still losing revenue.) All other things being equal, of course. The marginal reduction of taxes will ALSO increase the long-term growth potential of an economy, but this, of course, is also a fractional proposition, operating within larger natural constraints. (For example: the growth of an economy will not become 'infinite' just because taxes go to zero. Other, confounding factors would come to play at these extremes. An economy would not be able to sustain growth without law and order, a functioning justice system, national defense, education of the population, etc.) 2) the 'trickle-down' theory of economics (that tax cuts targeted at the wealthiest sectors of the population would always trickle down to the rest, the majority, of the population, on a one-to-one or greater then one-to-one basis). This last 'theory' has been pretty conclusively disproved, in that there is no rule or 'law' that mandates that money must always 'trickle down' on a one-to-one or greater basis like that. A 'rich' person, given a tax break, does not HAVE TO structure his affairs so that ALL of his tax break is re-invested in the economy. He does not HAVE to start businesses and employ more people in the US with that extra money --- he could, for example, choose to start a business overseas and employ people THERE... or he could choose to simply bank the extra money overseas, or spend it overseas, or put it 'under his mattress', etc. If one took a tax break and bought land in Brazil with the money, I'd be hard-pressed to see how that would automatically increase employment in the US....