The real impact of Tax Cuts

I read this Post from Tyler Cowen, which leads me back to this Post from Paul Krugman. Cowen suggests that immigration has little to do with median Income stagnation. Krugman would have Us believe that Inflation has nothing to do with Commodity Pricing. Krugman takes the Phelps position, and contests that Wages are the ultimate core price mechanism without resort to Commodity pricing. Myself, I can only see two things which could create the divergence between the rapid response of Inflation to Commodity pricing in the 1970s, and the expressed lack of inflationary response of Today. The first possibility is the widespread development of Consumer Credit and its consistent use, and the second possibility stands as the alteration of the Tax system in force.

The development of Consumer Credit seems more a response to the need for Consumer Credit, than it does a propellent of such need. I would at least like to believe that people would not propel themselves into debt except that they could not maintain their lifestyle and commitments without assumption of such debt. The only way they would need this accessary source of Income was if something had curtailed the natural flow of Wages coming their way. This is to say that the wild swings in Commodity pricing propelled their thrust into Consumer debt, the underlying cause being a stagnation of Wages.

This leaves Us with the Tax system currently in place. We are in the land of Tax Cuts everywhere, though no one ever presents solid Proof that it actually provides economic growth. They never seem to be reversed under any circumstances, even to Cities, States, and the federal government potentially falling into debt Receivership. Why there is such commitment to Tax Cuts is another Story which may be brought up later. I am trying to discern what impact that Tax Cuts could possibly have on Wage stagnation. Tax Cuts grant business leadership a greater retained amount of business Profits after Wages have already been paid. This is a distinct advantage to business leadership, since it greatly enhances their own economic position and status. Here is the element in Question: Does business perceive any heightened advantage to suppression of Wage increases? I submit that they do desire an increase in after-Cost Profits, now that they can personally keep a great share of the after-Tax Profits. It takes little visualization to view business leadership as the enemies of both expanded labor force and Wage increases which would seem natural given the volume of Production. This is what I believe holds the real impact on Wage stagnation and suppressed Hiring. lgl