Friday, April 22, 2016

So what else is new?

Harris&Ewing Less taxes, more jobs, US Chamber of Commerce campaign 1939

ht Raúl Ilargi Meijer atThe Automatic Earth


Simsalablunder said...

Less taxes - more jobs = ?

Tom Hickey said...

Assumes that taxes subtract from loanable funds for investment. Same with government borrowing. The CoC, which represents US business interest, views government as competing with the private sector for limited funds.

Unknown said...

that billboard is 100% accurate, less taxation leads always and everywhere to more consumption and investment which leads to more jobs. The question is always, which tax cuts produce the largest mulitplier aka are the most effective, and those are always cutting taxes on people with a higher propensity to consume aka tax cuts for rich people arent as stimulative because there are simply not enough rich humans to buy enough stuff to employ everyone. 1% literally means 1% of the population. 3 million people, even if they had every dollar in existence could never buy enough pairs of jeans to employ the other 320 million of us.

Tom Hickey said...

Right. The CoC is for tax cuts that disproportionately favor the wealthy on the assumption that the funds that are not taxed will be invested and that will create jobs.

But as Michael Hudson has shown, the funds that are not taxed are predominantly saved by the wealthy rather than being consumed or invested productively.

Removing funds from circular flow by taxation or saving is pretty much the same economically in their effect on sectoral balances.

The difference is that taxation reduces the saving the upper tiers, whereas increasing it leads to greater political land therefore economic power of the wealthy to influence policy in their favor through political contribution and lobbying. This increases the potential of the extraction of economic rent, further exacerbating inquality and privilege. This is not only poisonous for a democratic republic, it is also poisonous economically owing to demand leakage to saving unless exports make up the difference or government runs a deficit to offset.

Unknown said...

Of course I agree with all that Tom, just pointing out that from a technical POV, tax cuts do create jobs. Unfortunately, on the left tax cuts have gotten a bad rap due mainly IMHO to the sound money paradigm leading to dismay that economic lefties wont have enough revenue to fund their spending policies.

WRT the rich people getting more money via tax cuts, even if all that is saved\financially invested (RE:not invested into an actual business) more financial advisors, accountants, lawyers, etc still get employed.

Ironic that the reality is the opposite of what modern economic lefties believe. They think that rich people need to fund Govt spending programs, when actually raising taxes on the 1% cant MMT "Fund" (re: offset the inflationary bias of increased Govt spending) programs for the 99% for the same reason that tax cuts on the 1% arent very stimulative to the macro economy.

IOW, rich people cant buy enough stuff to employ everyone is the mirror reflection people spending more money doesnt drive inflation because they cant buy enough stuff.

So if we were to ever achieve a true full employment MMT economy, any increased spending on the 99% would have to be offset not with tax increases on the 1% but on the 99% itself.

Random said...

"would have to be offset not with tax increases on the 1% but on the 99% itself."

Cut bank lending first.