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Why would giving ordinary people disincentivize companies from expanding production? Quite the opposite, people now have extra money to spent, so they should ge
by js8 4y ago
Why would giving ordinary people disincentivize companies from expanding production? Quite the opposite, people now have extra money to spent, so they should get the loans going for investment expansion!
The last sentence is exactly why you need to tax the big owners and corporations and not the workers, because they control most of the additional money supply in the profit-driven inflation.
(That being said, and as was noted, of course government can also run a surplus with the windfall tax, and that takes the money out of circulation entirely. However, as I explain above, inflation can be more complex, it might be money oversupply in only parts of the network, not the whole network.)
- wizofaus 4y agoI assume GP meant the act of imposing windfall taxes - if you know for certain that x% of your profits will be eaten up in taxes, but you can only make some sort of rough guess at how much more demand there might be as a result of cash handouts etc., there's probably not a great motivation to expand production.
- js8 4y agoIsn't that just restating a (probably) truism that investment into financial bubbles tends to be easier than expanding real production? Where does the extra profit go (in the absence of windfall tax)? I doubt it goes to expanding production, because without windfall tax, you won't see demand change (and, btw, with windfall tax you don't have to estimate, you will directly see customers having more money to spend). So it will go into stock buybacks, real estate and other ways to inflate asset bubbles. These are seemingly easier ways to park money than to make actual real investment decision of expanding certain production.