Monday, December 13, 2010

Ways of Doing Business

Some people insist on making things more difficult than they have to be. One can test the value of Tax Cuts in generation of Jobs simply by study of past performance. One simply has to designate the X-axis as the Tax Rate–going from 40% through Stages until 27% tax rate is reached; the viable range We could be talking, each tax rate time-dated to present a Time scale for evaluation. The Y-axis would be assigned the total amount of Labor with two graphs set up by time-dating; those who are employed, and the total number seeking employment at that specific time; One can place a Time line across the top as a Z-line. Thereafter, one has only to plot in the specific points at each period of time. I have always been of the suspicion that the graph of Tax Cuts actually resembled a Bell Curve, where over-reduction of tax rates actually reduced the tendency to acquire more labor assets (this meaning Business was using reduced Government taxation to pay for their Static Costs).

I agree with Felix Salmon that Obama’s cut of payroll taxes for Social Security will not affect the security of Social Security. The real Crocodile remains the refusal to separate Medicare and Social Security. A simple Presidential Decree stating that FICA taxes must be split into Social Security General Fund, and Medicare Special Fund would force Congress to confront the real Gorilla in the Mist. If Obama would wish to differentiate his Presidency from all Others, he would do this immediately. It would show Everyone where the real Shortfall lay, and the amounts of taxation necessary to maintain the program. Some will say this will incite Congress to cancel the Medicare program, but We are dealing with the fighting Senior Citizens here! They still do the majority of Voting, and mostly still have dominant control of political contributions. I would start the fight now, and mostly have the Dust settle prior to the next Election.

Scott Sumner tries hard to find some effective way to eliminate Government intervention from the economy, without revisiting all the tribulations of the Past. He might have come up with a Solution which will work. I am not deep enough into his analysis to tell the Stress points of the program, and whether it would actually work or find too great a resistence; an economic prospect common with all new movements in the economy. Here is my Kicker: Fiat Money is Fiat Money; the Issuer should be able to declare its worth. Scott would place an evaluation process on the fiat money, letting the Public set their own value. I would prefer a Treasury declaration that the Dollar was worth what it was in 1960, and that all Prices and Wages should reflect this value; the alternative being that Taxpayers will be subject to 1960 taxation rates. The Fed will be ordered to honor only the reduced Deposits rendered by the demanded Deflation rate. Mortgage-holders and other Debt can appeal to the Fed for revised estimate of their payments, which will be legally binding. All labor contracts will be declared Null and Void in legal proceedings, unless they have been proportionally reduced. This will probably seem really radical, but I suspicion that Labor will be far safer in this manner, than they would be under the Sumner plan. lgl

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