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Date:         Mon, 16 Nov 1992 11:40:23 -0500
From:         ZIMMERJ@WABASH.BITNET
Subject: Re: response to JasonZ's prime comments

From: Andrew Allen <E7L8ALL@TOWSONVX.BITNET>

>Well, I will look for exact figures, but I seem to remember hearing a
>story on NPR about the redistribution of the tax burden since 1978;
>if I remember correctly the portion of the tax burden paid by
>corporations dropped 16% of the total tax burden. (Not 16% of what they
>used to pay but 16% of whatever amount is paid by all revenue sources)

This is completely extraneous to your point about across-the-board tax cuts
benefiting the rich.  MY point was that the tax code is currently biased
against the rich (possibly, at least) so that a tax cut would make the system
more fair.

>>>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.

>>You could argue that, but you would be wrong.  When you sum a few hundred
>>dollars over a few million taxpayers, the ammount adds up pretty quick.  I
>>agree, though, that such a tax cut probably wouldn't do much to improve the
>>economies long-run situation.

>I didn't say that it was an insignificant amount of revenue lost, what I
>meant is that it is not going to allow/induce somebody to go out and buy
>a house or a car or start up a small business.

Consumption includes more than durable goods purchases, and starting up a small
business doesn't necessarily contribute *anything* to consumption.  Anyway, you
haven't refuted my point that a few extra hundred dollars *will* increase
consumption expenditures.

>The investments of the wealthy are doomed to failure in the long run if
>the great mass of citizens cannot afford to consume the products that
>they create. Even if through driving the cost of labor down to third
>world levels

Actually, greater investment (additions to the capital stock) causes wages to
rise, since labor becomes more productive.  But anyway...

>we were able to obtain significantly larger market shares
>for our products abroad, consumption of our goods would fall off as
>their economies suffered from the loss of our market for their goods.

Then why hasn't this happened as our international market shares *have*
increased?

>For ordinary taxpayers, yes these encouragements require that one undertakes
>the activity that they are trying to stimulate through incentives; ie.,
>you can write off interest if you buy a home and take out a mortgage to
>do so.

>On the other hand, when Reagan cut tax rates to "stimulate business to
>create jobs" the cuts were not tied in any way to the actual creation
>of new positions.

Oh.  I thought you were complaining about loopholes, and not the tax cuts
themselves.

>>You sure do show a lot of hostility toward those with a greater income than
>>yours.  Term like "schmuck" and "sclumps" imply more jealosy than intellectual
>>disagreement.

>It's sort of funny actually; I was born into a relatively well-off family,
>and I will almost inevitably (barring early death or being disowned) be
>pretty comfortable at some (currently) indeterminate time. I do not
>dislike wealthy people, many of my friends make more money than I do
>and it really isn't a significant issue between us.

I'm sure, then, that you refused the tax cuts and loopholes which you so
strenuously oppose.  Or did you take advantage of them just like the "schmuks"
you dislike?

>>Actually, Reagan merely tried to reduce the government's involvement in unions
   .
>>You might remember that unions derive most of their power from the fact that
>>the government has intervened on their behalf.  Making unions stand on their
>>own two feet in no way constitutes "breaking" a union, any more than a failure
>>to subsidize GM would constitute "breaking" GM.

>No, no, no you won't get away with that one, sorry...B)

>Perhaps you remember a guy named Paul Volcker, tall, goofy-looking guy,
>always wore an old suit... Ran some little organization called the "Fed?"

If you blame Volker for "breaking" unions (from the fed, somehow), then why did
you lay the blame on Reagan?  Since you are obviously an expert on the fed, you
must know that Volcker was appointed by Carter.  Do you therefore also hold
Carter responsible for "breaking" unions?

>Volcker used to carry a card in his pocket on which he made notes of
>wage settlements by various unions, his object in keeping track was
>what he called "wage deceleration." Volcker used Fed policy in essence
>to break organized labor's ability to demand higher wages, at the behest
>of the Reaganistas.

I would sure enjoy an explanation of how this happened.  It seems to me a
little absurd to argue that Volcker was sitting back thinking "how can I stage
open market operations so I can bust the unions and help out my buddy Ron?"

But I don't have to tell you that Volcker and Reagan didn't like one another.
As an avid fed-watcher, you already know that Reagan initially opposed the idea
of reappointing Volcker and only did so after enormous political pressure.

>Social Security is indexed for inflation,

Yes, but that usually isn't the main source of income for retirees.  Many of
them live off interest on CDs or coupon bonds, which are definately NOT indexed
and for whom inflation is a serious threat.

>-other Andy

JasonZ