Tuesday, February 08, 2011

Read It and Weep

I went yesterday into How Tax remissions eliminations do not directly impact economic growth rates, suggesting that Tax rates need not be raised; that only wildfire tax exemptions and reductions need to be eliminated. Mark Thoma today outlines How the economic recovery can be hampered by the Cost-Cutting efforts at the State and Local levels of Government. Conservatives seem to have conquered State and Local levels of Government, and have chosen an economic policy favoring Tax Cuts over retained Spending on these levels. I do not believe this is the proper economic policy to follow, and suggest that serious economic evaluation should be brought to bear on this area.

I advanced an hypothesis yesterday which stated that Consumer Demand showed no Sign of reduction when overall taxation was less than 25% of total Sales transactions. This is commentary on all taxation on the Products, and is an area which should be studied. This is setup for a necessary secondary analysis, questioning whether State and Local taxation have been reducing as a percentage of taxation on final Sales transactions. It is inconceivable that States and Local governments could maintain a stable Budget performance in past decades, but now finds itself in such dire straits. Only two conditions could explain the Situation: State and Local governments had splurged into a huge increase in Spending; or two, these governments have been surrendering their necessary taxation rates to maintain integrity.

The Conservative movement has been producing reduction of Tax receipts at every level of government, and everyone have been watching the deficits pile up. Conservatives utilize what is basically corrupted Keynesian policy to justify this reduction of Tax receipts by claims that it stimulated economic growth. I asserted yesterday that there may be some gain from actual reduction of Tax rates, but this is still to be proven when total Taxation of final Sales transactions remain below 25%. I also proposed that Tax remissions and reductions did nothing for economic stimulus; here, We must examine whether is produces more economic growth than the Cost of the stimulus, considering the financial cost, the pressures on the Price schedules of resources consumed, etc. I contend that such Tax activity does not advance economic growth, and eats up necessary and beneficial Tax revenues required for actual economic stimulus. lgl

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