I hear a continual outpouring of this meme for every ill of the world. It is accompanied by the don't trust the left the market forces of unregulated low taxed capitalism is the answer to all our problems. Is this true?
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To start the ball rolling and give everyone something to really get their teeth into, I would say no. A high graduated direct taxation high government spending mixed economy is the way to go.
I would back this up by saying that high corporate taxes encourage businesses to divert profits that would otherwise be forfeited in tax into capital investment and paying their workforce better, while lower corporate taxes encourage the opposite and profit taking. |
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By (user no longer on site)
over a year ago
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While agreeing, in part, with your thinking in the second part. Which certainly makes intuitive sense. It is a historic fact that whenever corporation tax rates have increased the amount of tax paid has fallen. The reverse is true. Lower rates have increased the actual revenue. |
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"While agreeing, in part, with your thinking in the second part. Which certainly makes intuitive sense. It is a historic fact that whenever corporation tax rates have increased the amount of tax paid has fallen. The reverse is true. Lower rates have increased the actual revenue."
I do not believe this, I believe that in the first year after a corporate tax cut revenue rises but after that it falls back to the same or near % of tax raised against tax owed.
I further believe that by allowing businesses to write off infrastructure investment and set that directly against tax over a short time say 2 or 3 years then businesses will invest because if you have a choice of spending your money on improving (giving good pay rises and bonuses to recognise effort and achievement) or expanding your business or give it to the government in the form of a high marginal rate of tax. You will spend enough money to drop you below where you attract the higher rate of tax.
In contrast if you have low direct taxes there are no penalties applied if you fail to reward your staff and don't invest. In fact such a system encourages profit stuffing at the expense of investment in order to pay shareholders bigger dividends...
Now remember most investors are institutional investors with no interest in the business prospering long term, but total interest in getting the highest intimidate return on their investment. Resulting in as we see in the UK today dropping productivity and a continual dripping loss of quality jobs... |
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"What about if businesses invest in automation? "
Machines get more complex over time and in doing so able to handle more complex tasks. But there will always be rolls for humans even if they are contrived because without that eventually we will have fully automated factories producing goods that are shipped in computer guided transport to distribution hubs where they will sit until obsolete because everyone has been sacked and the 10 or 20 people who control 99.9% of the worlds wealth would not live long enough to fill out the order forms for a single years production...
Eventually we either destroy ourselves and the world or abandon capitalism and adopt a more socialist way of living. |
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