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Weird how government agencies that fall to regulatory capture all keep advocating for things beneficial to the industries they oversee. Sufficient tax increase

by mjhay 4y ago

Weird how government agencies that fall to regulatory capture all keep advocating for things beneficial to the industries they oversee. Sufficient tax increases for the well-off would have the same effect as punishing the working class, but that's never an option for some reason.

californical 4y ago
Not exactly — wealthy people don’t spend most of their money on goods & services, they leave it parked in investments. Reducing a wealthy person’s net worth don’t really affect how much they spend on consumer goods. A poor or working-class person spends (nearly) all of their money on consumer goods. Give them 10% more money and they try to buy 10% more things. Restricting money on the wealthy doesn’t reduce demand for GPUs for example, but restricting money on low-middle income people does. That lower demand for consumer goods is how you can slow inflation.
- soulofmischief 4y ago
  Then tax the wealthy and put that money into the hands of people who actually need it.
  - californical 4y ago
    Well that causes inflation, was my point, because that money wasn’t (isn’t) being used to compete for consumer goods. But by redistributing it to lower and middle class, it’s now being spent on consumer goods, increasing demand for the goods, causing inflation.
ethbr0 4y ago
> Sufficient tax increases for the well-off would have the same effect as punishing the working class Would they? From an economic perspective (not a social/fairness one), isn't it well studied that consumption (as percentage of income) is inversely proportional to higher/lower total income? So raising tax on the well-off would be more akin to raising the prime rate (i.e. decreasing the amount of well-off capital that's reinvested elsewhere) with the added effect of increasing consumption by increasing federal government spending. Note: I'm not opining on the justness of this, simply the mechanism.
mjhay 4y ago
replying to californical: "Sufficient" is the operative word here. There's a tremendous amount of non-productive rent-seeking, such as literal rents. These are a massive drag on our economy, because they shift investments towards non-productive use. More targeted tax increases to discourage the worst rent-seeking would help a lot, in addition to generating revenue and easing price pressures.
- kodah 4y ago
  imo, this is actually a fairly salient point. Wealthy people do put most of their cash in investments but not all investments are equal to the health of the economy or as detrimental if toyed with.

by mjhay 4y ago

californical 4y ago

Not exactly — wealthy people don’t spend most of their money on goods & services, they leave it parked in investments. Reducing a wealthy person’s net worth don’t really affect how much they spend on consumer goods. A poor or working-class person spends (nearly) all of their money on consumer goods. Give them 10% more money and they try to buy 10% more things. Restricting money on the wealthy doesn’t reduce demand for GPUs for example, but restricting money on low-middle income people does. That lower demand for consumer goods is how you can slow inflation.

soulofmischief 4y ago
Then tax the wealthy and put that money into the hands of people who actually need it.
- californical 4y ago
  Well that causes inflation, was my point, because that money wasn’t (isn’t) being used to compete for consumer goods. But by redistributing it to lower and middle class, it’s now being spent on consumer goods, increasing demand for the goods, causing inflation.

ethbr0 4y ago

> Sufficient tax increases for the well-off would have the same effect as punishing the working class Would they? From an economic perspective (not a social/fairness one), isn't it well studied that consumption (as percentage of income) is inversely proportional to higher/lower total income? So raising tax on the well-off would be more akin to raising the prime rate (i.e. decreasing the amount of well-off capital that's reinvested elsewhere) with the added effect of increasing consumption by increasing federal government spending. Note: I'm not opining on the justness of this, simply the mechanism.

mjhay 4y ago

replying to californical: "Sufficient" is the operative word here. There's a tremendous amount of non-productive rent-seeking, such as literal rents. These are a massive drag on our economy, because they shift investments towards non-productive use. More targeted tax increases to discourage the worst rent-seeking would help a lot, in addition to generating revenue and easing price pressures.

kodah 4y ago
imo, this is actually a fairly salient point. Wealthy people do put most of their cash in investments but not all investments are equal to the health of the economy or as detrimental if toyed with.