Dear Joachim,
Whatever Harry's intention, those are the words I responded too. I think
if you read my answer, I totally agree with you. To restate, my argument
is based on the concept that the ratio of tax burdens over the last 35
years has went from corporate 50% and income tax 50% in general terms to
currently corporate is about 30% and income tax and VAT brings the citizen
share up to 70%. A massive shift in tax burden from corporate to citizen
which affects you and me in our choices as you have observed. What I have
attempted to point out by example, is the way in which it has limited my
choices and that the canard of your "gonna get taxed anyway" is not a valid
argument.
If corporations and their wealthy owners actually paid their 50%, I assume
that prices will rise. However I would rather have higher prices and
disposable income rather than low prices and no disposable income. The
choice of how to spend my disposable income then becomes mine - as it is
now, it is taken away from me through high taxes before I get a chance to
make a choice. This can be extended. One of the reasons for higher
unemployment is the lack of consumer disposable income. The corporate
sector has been so effective, that now they have overcapacity which is
another way of saying lack of consumer purchasing power. A direct result -
not just of high taxes, but more specifically high taxes on consumers and
lower taxes for corporations and the wealthy.
I can't find the original message this quote came from:
> Taxing profits merely passes those taxes through to the
> >consumer."
This assumes that taxes and prices have no influence on the choices
we make. I'm certain Harry (if it's Harry's quote) had something
else in mind.
Joe
"Taxing high incomes is very hopeless. It would be better to consider why
they are high. Taxing profits merely passes those taxes through to the
consumer."
Well Harry, this bit of truism has stumped me for quite awhile but I think
I have a rebuttal.
The conventional neo-con wisdom is that if you tax my profits, then I have
to raise my prices which makes the price of my goods and services higher
which means that you can buy less. So, why don't you pay all the taxes and
for my part of the bargain I will deliver the best and lowest
priced products to
you and because of my superior wisdom and entrepreneurial spirit, my
benefit should be increased income because I am more productive.
Well, if that is the Faustian bargain they offer, let me try a counter
proposal. Let the prices rise, tax the profits and your income heavily or
at least at the same level as mine. This will in effect lower my taxes
giving me more disposable income. Now the difference is that with more
disposable income, I have more choice as to which of the high priced goods
you produce I might want to purchase and own/use.
In my personal life, I have four kinds of income that come from my gross.
1. The portion I owe the government for all the services it provides.
2. Essential income - food to continue living, shelter and transportation.
3. Disposable income, which is what I spend in the private sector for all
the goods and services they provide.
4. Savings and emergency income for when my car breaks down or I want to
retire and not take up residence on the pavement at some future time.
Now, if I pay out too much for one and two, then number three becomes less.
Because it is less, there are many things I can't buy even though the
price is low. If my share to the government was reduced by 10%, that money
goes down to income number 3 and 4 where I am the one having choice. So,
what I am saying is that I would rather have the choice of which high
priced goods I buy, because I will have some money, rather than paying it
in taxes so the neo-cons can work to produce lower priced goods which I
can't afford anyway because in the hierarchy of income, I don't get a
choice.
Now, aside from all the other problems in the economic world, I would like
to thank you for giving me a reason for writing this and putting it our for
criticism and review.
Respectfully
Thomas Lunde
