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I wonder when we’ll admit wholesale that interest rate and money supply just aren’t very good economic levers in the absence of fiscal policy? Re tax cuts, ins
by abakker 9y ago
I wonder when we’ll admit wholesale that interest rate and money supply just aren’t very good economic levers in the absence of fiscal policy?
Re tax cuts, instead of tax cuts on the middle class, make wage increases tax deductible for corporations. As someone in the middle class, I don’t care what my rate is, I care what the take home is. Reward corporations for passing more money through to employees by lowering the taxes on their earnings.
- diggernet 9y agoWages are already tax deductible for corporations.
- abakker 9y agoyes, I should clarify, offer better deductions. i.e. For every dollar of wage, deduct 2 from the tax bill, or some such. Wage stagnation worries me a lot, specifically because of what it does to aggregate demand.
- rosylamp 9y agoThat sounds like something that would be absolutely abused
- abakker 9y agosigh, probably. OTOH, unless we drastically cut government spending, tax increases on the rich and tax decreases on the middle class won't really help much. Maybe my armchair policy is a bad one, but providing the carrot to corporations to increase wages seems more rational than constantly providing them tax incentives to relocate to places where they can lower their effective tax rate. (see GE moving to MA from CT, e.g.). If you could achieve the same tax rate change by encouraging them to simply pay their workers more, some good might actually come of that policy.
- rosylamp 9y agodepends what spending is on, government spending can be incredibly productive. Tax increases on the rich would work better if they actually paid them. This is a difficult problem, I certainly don't have the answer, and I'm not convinced there is a simple answer.
- bubbleRefuge 9y agoIts not that complicated. We could just have the fed pay everyones payroll taxes including the corporations share. This would jack up the economy. The problem is getting this policy through congress. The entire macro-economic problem is a political problem.