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The problem is to move capital from where it's not useful (in the bank accounts and portfolios of ultra-wealthy) to where it's useful. A tax on consumption wil

by mrpopo 6y ago

The problem is to move capital from where it's not useful (in the bank accounts and portfolios of ultra-wealthy) to where it's useful. A tax on consumption will have a bigger impact on less wealthy people whose income is spent towards basic needs, whereas more wealthy people hoard their capital (and profit out of it). I fail to see how a focus on consumption should be favored?

chordalkeyboard 6y ago
> The problem is to move capital from where it's not useful (in the bank accounts and portfolios of ultra-wealthy) to where it's useful. Its quite useful in bank accounts because those banks make loans to businesses, which secure the loan with collateral and invest the loan in expanding their business, offering more goods and services at more competitive prices, Thereby generating more value. This is investment. > A tax on consumption will have a bigger impact on less wealthy people whose income is spent towards basic needs Perhaps so, but taxing investment also hurts less wealthy people to a greater extent, because they have less money to invest and so the investment tax makes it more difficult for them to catch up to more wealthy people by investing. > whereas more wealthy people hoard their capital (and profit out of it). This is why they are wealthy and this behavior should be emulated by the less wealthy if they wish to have more money available for consumption in the long run. > I fail to see how a focus on consumption should be favored? Because the aggregate effect of tax incentives shapes the market and investment increases the amount of value created by a given unit of labor, and the amount of value available in the market at all price levels. Incentivizing consumption (by taxing investment more than consumption) causes more people to consume more of their value. Incentivizing investment causes more people to invest more value, creating more aggregate value.

by mrpopo 6y ago

chordalkeyboard 6y ago

> The problem is to move capital from where it's not useful (in the bank accounts and portfolios of ultra-wealthy) to where it's useful. Its quite useful in bank accounts because those banks make loans to businesses, which secure the loan with collateral and invest the loan in expanding their business, offering more goods and services at more competitive prices, Thereby generating more value. This is investment. > A tax on consumption will have a bigger impact on less wealthy people whose income is spent towards basic needs Perhaps so, but taxing investment also hurts less wealthy people to a greater extent, because they have less money to invest and so the investment tax makes it more difficult for them to catch up to more wealthy people by investing. > whereas more wealthy people hoard their capital (and profit out of it). This is why they are wealthy and this behavior should be emulated by the less wealthy if they wish to have more money available for consumption in the long run. > I fail to see how a focus on consumption should be favored? Because the aggregate effect of tax incentives shapes the market and investment increases the amount of value created by a given unit of labor, and the amount of value available in the market at all price levels. Incentivizing consumption (by taxing investment more than consumption) causes more people to consume more of their value. Incentivizing investment causes more people to invest more value, creating more aggregate value.