Wednesday, February 15, 2006

Undiscussed Effects of real Tax rates

Everyone who studies current Economic and Business trends understands the basic format under which Taxes are discussed. The trouble is People concentrate on areas which reinforce their own positions, providing no analysis of impacts standing as oppositional or neutral to their own positions. This Post will try to outline some of the undiscussed.

1) Tax practice affects Business practices: The existence of Tax loopholes do more than just give Businesses more money to Invest. The existence of the Tax loopholes eliminates Business desire to curb Expenses, leads Business to invest in uneconomic ventures solely for Tax loophole advantage, and makes Business practice a propellant of Inflation.

2) No one actually discusses why the wealthiest Economy in existence should have Public Debt as a significant percentage of GDP. They also fail to discuss the value of Economic policy which insists on advancing Public Debt ratios. We have forgotten any Concept of a self-sustaining Economy which actually makes longterm Profit overall. Exploration of the above Concept could itself propel a different outlook, with construction of potential economic models.

3) Current Tax practice encourages a Spend It Now philosophy among both Business and Consumer, with a Government pat on the head in the form of low Taxes; leaving some down-the-road myth of efficient Economy to pay off the Expenditures of Today. Again, this mythic Economy is not modeled.

4) The Bush administration has just proposed Dynamic Analysis of Tax Cuts as a propaganda organ of the Administration. It will have economic soundness if it also examines the inflationary impact which Tax Cuts incite in the Economy.

5) Tax policy is also not examined for its destructive capacity in the realm of marginal-Profit industries. An incredible amount of American industry has been forced to close down over the last Thirty years, mainly because they could not match the Profits return for Investors, or the Wage packages of Labor, generated by major Profit sectors wanting to inflate their Operating Costs for Tax purposes.

Any Economist, if truthful and wanting to advance the Dismal Science, could articulate many more than these five Issues, and all Issues have a derogatory impact upon the American economy. We need to change Our Storytelling. lgl


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