🚀 go-pugleaf

Quentin Lewis wrote:

> But you HAVE NO CHOICE! With a sales tax, you can be a little
> discriminating about how much tax you give them, and how much you save. It
> would be a very good incentive to save.
> 
> You currently have very little insentive to save, and when you do, the
> returns (and the already taxed income) are then taxed. You might as well
> spend it and enjoy it now.
> 
> -Quentin

Actually the government would prefer if you DON'T save. I'll illustrate:

Say you earn $10 and you put it in the bank for a year before you spend it.
The government will tax, oh, say $3 worth of your ten (leaving you $7) and you'll earn a
few pennies over the year (interest -- well actually if only had $10 bucks in the bank,
most modern banks would eat through "bank service charges" in nothing flat and get gain
would have a minus sign in front of it) and they'll take one or two more pennies (some
percentage) and then you'll spend it and pay a few more penies in sales tax (unless you
use it for gas, cigarettes, or liquor in which case they'll take a LOT more pennies).
Generating a net revenue of between $3 & $4 for the government.

Now assume that, instead of saving, you decide to spend that money the first week, the
person who receives it is then taxed then then they in turn spend it on something else
(and pay a tax) then the new receiver spends it, etc. (you get the picture) the taxes on
that SAME original principal (which is being whittled down to nothing eventually) keeps
getting re-taxed during the course of the year. Eventually the government ends up with
most of the $10. 

But... if you're spending money on merchants than they're selling more product and need
more workers to support the stores, manufacturing of product, etc. so it creates more
employment and creates a healthier economy. This makes it easier for YOU to get a higher
paying job, making it less necessary to save your money because "they're always be more
of it where that came from". So your $10 will quickly be replenished by next weeks
paycheck. In the meantime it creates more revenue for the government.

The more rapid turnover of money creates a healthy economy. Saving hurts the economy.
People generally save when they believe "bad times" are ahead (it's a mental thing). But
it becomes a self-fulfilling prophecy because if enough people believe it, then enough
people save, stiffling the economy until bad times really do happen.

Money can only work for people if it flows. If the flow of it stops, then more people
are hurt.

This is a rather simplistic view of economy and was the basic strategy of the
"Reagan-omics" of the 80's (actually Kennedy had the idea before Reagan and somebody
else may have had the idea before him). During the 80s, the treasury did report that
income to the government was sharply UP... but so was the national debt.

The Democrats will claim that Reagan's "voo-doo economics" didn't work. But what is
undeniable is that revenues WERE up, so in some capacity the theory did in fact work
(this point is not disputable). The Republicans naturally blame the Democrats for the
failure (who controlled the House at the time) for spending more government revenues
than the government was generating (it is also undeniable that Congressional spending
was sharply UP and is a matter of historical fact than Democrats controlled congress).
Whether Democrats are completely responsible is a "leap".

As we are all witness to the recent government shutdown (and possibly preparing to
witness another) we know that in fact, the congress DOES write and approve their own
budget bill which is later signed (or vetoed) by the president. If a veto occurs, a 2/3
majority of Congress can over-ride the president's veto. So a unified congress can
basically spend anything they want (the president can't do this). The president does
outline a budget plan of his (or her, although we have never actually had a "her" --
this maybe sexist and I'm sure that at least in part, it probably is), but ultimately
this is a guideline passed to congress which they can completely ignore. If one
political party doesn't dominate a 2/3 majority of the house, than they probably need to
get the president to "go along" with their plan and should entertain the president's
budget guidelines/ideas if they expect the president to sign the plan.

Being a moderate myself, I would assert that anyone watching what happened during the
80s and watching what's happening now cannot escape the conclusion that BOTH SIDES share
the blame.

-- 
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 Timothy S. Campbell - EDS CSTS/Enterprise Network & Compute Services
 Internet:  timothy.campbell@eng.eds.com
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