Taxes as Economic Agent

I have just finished reading the article of Abhijit Banerjee by way of Greg Mankiw and Tyler Cowen. The article is very much worth reading, and I would advise it, if one is interested in improving the performance of schools. What captured my attention, though, was his discussion of the machine mode of definition of an Economy. Banerjee was rather dismissive of such an approach. I wondered whether such a degree of denial of consistent economic reactions was warranted, considering the similarity of performance between divergent economies. It seems to myself that the interaction of Resource Costs, Production Costs, Distribution Costs, and Labor Costs set Prices in a similarity, whether We are talking about a Primitive economy, an advanced Capitalist Market economy, or an Command economy of Government-set Pricing. It need a greater investigation of primary roles in the Economy, and their methods of assignation.

The a priori need for a theoretical examination does not insure I will make such a Study, but as I thought about its necessary component parts, I began to wonder about the economic role and purpose of Taxes. Everyone can work out the basic declared need of Taxation to pay for those Goods and Services necessary to the Economy, which are not likely to be paid by the Private Sector. This definition presents an inadequate posture, though, when contemplating the actual role played by Taxation in almost every economy; a role established by a governing Authority much influenced by the Private Sector itself. The scope of the examination has immediately expanded exponentially through the practical Whole of Economic literature.

I have not, or could claim, knowledge of all the miniate of Economics relative to the issue of Taxation. Any discussion must be general of note, and suffer the impact of inexactitude. Taxation pays for Government expenditures, at least to some degree; adoption of some practices of Government lead to dismissal of considerable amount of Debt, either through direct abrogation, or by the expedient of generated Inflation. Taxes express various other impacts as well. The percentage amounts of Taxation often spur Booms, though rarely Recessions, no matter how much Conservatives and Libertarians would insist; taxes must be sufficiently high as to rival Labor Costs, not just Resource Costs or Utility Costs as they do now (the theoretical argument here is so involved I would not even write a Book about it). Taxes may even forestall Recessions, as effectively high percentage taxation cancels the real Pay of extremist Ventures and corruptive practices; expansion of the Economy is not so rapid, or is the eventual Recession near as deep. Taxes are currently also utilized to reward desired Ends, and punish identified deviant practice; the problem here resides in the defining Authority of what is bad. It is clear that the Economic Function of Taxation will require quite a number of Posts, if I choose to pursue the Subject. lgl