From: E7L8ALL@TOWSONVX.BITNET (Andrew Allen)
Newsgroups: bit.listserv.politics
Subject: buffing out the primer pt.I
Date: 12 Nov 92 19:25:18 GMT
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU
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I have split this posting up into three convenient, bite-sized chunks as
it was getting a wee bit too big...

>       Once again you are not being consistent.  An income tax cut is not the
>same thing as a capital gains tax cut.  Although both would be beneficial to
>the economy (in different ways, of course).  Capital gains cuts are good for
>those with income to invest, businesses (especially small ones), pension funds,
>etc.

A capital gains tax cut favors the wealthy (they will receive the greatest
direct benefit from it), the sort of across the board tax cuts that I have
seen advocated by conservatives (note that there was no specific proposal
in the materials that you posted) favor the wealthy also in sheer amount of
benefit. I would also argue that a tax cut that only puts a couple of
hundred dollars in the hands of the average taxpayer is not going to
stimulate much consumption-fueled growth.

>       On the other hand, income tax cuts get more disposable income into the
>hands of the individual, who is a lot more efficient at allocating resources
>than the government.

The spending patterns of the wealthy are not driving the economy, so for the
economy's sake they do not need a tax cut. The spending patterns of the middle
and lower classes *do* drive the economy, it would be profitable to give
them a tax cut.


>       But as GM is now demonstrating, companies that abuse capital writeoffs
>and fail to downsize at the start of bad times will eventually either go out of
>business or be forced into rapid downsizing.

Ok, even supposing that the government wouldn't step in to save GM from the
market (an unlikely proposition), who *really* pays the price for the
failures and outright abuses of GM's management? The stockholders lose
some money, but the folks that really get hurt are those who lose their
jobs, and the communities that GM's former facilities are located in
which are destroyed by the massive loss of employment.

When a stockholder loses some money on the market, generally speaking
his other holdings (house(s) and other property) do not lose value;
when a major employer closes a plant often times it leads to a
localized depression causing workers not only to lose their jobs
but their property as well.


>       Part of the reason there are hundreds of tax exceptions and loopholes
>is because the taxes are currently too high for the market to sustain.

Another part of it is sheer greed and arrogance. When I throw a party I
can't write it off as a business expense - Malcolm Forbes could and did,
as do a lot of other wealthy individuals. I guess the greed part is
obvious; the arrogance part is that this schmuck thought that he was
doing something useful by wining and dining assorted wealthy schlumps
on his private yacht.

>       Government can be used to temper downturns in business, but you have to
>realize that that also tends to mean that government tempers upturns.

I think you miss my point, my point is that the "free market" does not
exist and if we were to somehow create it overnight it would devastate
our economy, further, that large corporations are receiving benefits
from government (ie., a form of insurance against market forces among other
things) that they are not paying for.


>>Boy, nobody whines as well (or as effectively) as the wealthy! When
>>Average Working Joe and Josephine don't get a salary increase for
>>a few years running and inflation eats at their incomes (buying power)
>>nobody starts talking about indexing their incomes to inflation for
>>tax purposes... or for that matter when J&J obtain some piddling
>>interest income on their bank accounts that doesn't get indexed
>>either, does it?

>       Joe and Josephine should be negotiating with their employer.

Joe and Josephine have been trying to but Reagan's tacit policy of breaking
the unions (we don't have to debate this do we?) wherever possible
has severely diminished the capacity of J&J to do this.


>       Good economic times are usually accompanied by low inflation.

During inflationary times workers wages generally rise (though somewhat
behind the curve of inflation) in response; at the same time the workers
who have invested in a home or anything bought on credit generally
benefit by a net reduction in the original price of their purchase.

In these "good" economic times workers are not getting adjustments
in their salaries and inflation is low but still there. Even if inflation
is only a couple of percent a year, if you don't get a raise for several
years it adds up.


> Brett'

-other Andy
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU