"You have to maintain a high growth rate to justify increasing debt, otherwise your currency will crash and discount the value of the equity linked to the currency as if it is junk, no?"
You got that right. Also, as Mark said above, it is the cost of carrying the debt that matters, not its
size. If interest rate to carry the debt is low, then a higher debt can be carried without hurting the
economy.
The last point I want to emphasize is that DEFICITS & TAXES ARE NOT A ZERO SUM GAME.
IOW, There is never a FIXED AMOUNT OF INCOMES OUT THERE TO BE TAXED. So, if taxes
are increased, the economy historically slows down. That makes the incomes go down.
Result? Treasury collects less aggregate dollars even with the tax increase. Just the opposite
has happened during the last 3 major tax reductions (Kennedy, Reagan & GW Bush). The
economy expanded enough to actually collect more taxes inspite of the taxcuts.
The only event which could result in higher tax collection in tandem with a tax increase is when
there is a windfall tax collection. Such was the case in late 1990's when the stock market went up
parabolic, and every seller during that period had to pay unusually high capital gains tax. That
includes yours truly. I think I paid more combined tax from 1996 thru 1999 than combined tax I
have paid during the rest of my life.
Deficit Spending
Started by
endisnear
, Feb 06 2007 03:21 AM
12 replies to this topic
#11
Posted 06 February 2007 - 04:14 PM
"Money cannot consistently be made trading every day or every week during the year." ~ Jesse Livermore Trading Rule
#12
Posted 06 February 2007 - 04:34 PM
Actually, true tax simplification would return increased revenues, too. I know guys who are happy to pay an accountant thousands to save barely a like amount on taxes.
Mark
Mark S Young
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#13
Posted 06 February 2007 - 04:43 PM
Actually, true tax simplification would return increased revenues, too. I know guys who are happy to pay an accountant thousands to save barely a like amount on taxes.
Mark
Your CPA will prob send you a Cmas card and buy you a round of golf, baseball tickets....Uncle Sams just gonna buy another HEAT round for a M1A2 ...