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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (851590)	4/22/2015 6:46:05 PM
From: tejek	Read Replies (1) \| Respond to of 1578012

Tax cuts are not a redistribution, they are a reduction in the amount of redistribution (and even that only if the reduced revenue results in transfer payment cuts) Huh? Clarity please.

To: TimF who wrote (851590)	4/22/2015 8:43:51 PM
From: combjelly	Read Replies (1) \| Respond to of 1578012

In this case, they are. They are cutting the progressive taxes and raising the regressive ones. That is redistributing the tax load, shifting it from the upper income brackets to the lower ones. A much beloved tactic by Republicans. The idea was that if they cut the progressive taxes then the economy would boom, making up the short fall in revenues by growth in the economy. i-node even figured out that it takes, on average, 18 months to make the difference up. It doesn't make a whole lot of sense, possibly because it doesn't happen. It certainly didn't in the case of Kansas. Yes, and I realize that i-node was arguing that for the federal level and Kansas is a state. The problem is, the theorized mechanisms should work better on the state level. But, ok. What about the federal level? I mean, i-node showed a graph... The graph didn't factor in all of the relevant parameters. Tax cuts usually occur when a recession starts. It is one of the tools a prudent government can use to stimulate the economy. But it isn't the only tool. The federal government can also run a deficit and use the money to stimulate the economy, hopefully by employing people. Lower unemployment means people are not as scared of losing their jobs. If they have job security, they are more willing to buy consumer goods and, because our economy is 70% plus consumer spending driven, the economy starts to improve. After an average period of about 18 months, the economy has rebounded. Because the population has grown in that 18 month period, and the weaker producers have been weeded out making the economy more efficient(see, recessions aren't all bad!), it has rebounded to a higher level that the previous peak. That means higher revenues, even at a lower tax rate. But, what happens if you impose austerity measures and cut spending to avoid running a deficit? Nothing good. Instead of employing people who have been laid off, they are left to unemployment. So more people are unemployed. If there are any social services, their costs go up because there are more people using them. If the government is providing said services, their spending cuts get reversed. People get concerned about their jobs and cut back on consumer spending to increase their cushion in case they get the ax. With the dropping consumer spending, businesses start laying off more people, causing people to cut back even more on their consumer spending. Eventually, you start getting deflation as more and more goods chase fewer and fewer dollars. Deflation brings the specter of wage cuts, after all, if goods cost less, dollars go further and wage cuts decrease the pressures to lay people off. But, the flip side is that to service any debt the workers have is more expensive relative to their wages. So now their is a wave of personal bankruptcies that moves through the economy. And that means the financial system is under pressure. And that means... Well, suffice it to say things can and do get worse. We know this happens; It isn't merely theory like wingnut economics. Because that sort of thing used to happen on a regular basis. You cannot have much of a middle class if everyone looses everything every couple of decades. Well, not everyone. The wealthy usually have something left. And everything is so cheap! At only pennies on the dollar, they can buy a lot! Because they are the only ones with pennies...