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Why Kamala Harris Will Not Bring Prices Down. Her Plan Needs Inflation | dlacalle.com
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this post was submitted on 03 Sep 2024
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Taxation does not restore money to the economy in any capacity or at any productivity level. It is purely fiscally destructive.
It increases the value of outstanding currency by reducing the total volume in circulation.
This is Econ 101, Supply & Demand level stuff. Decreasing supply of dollars means reducing the demand for goods and services. If you're selling widgets for $5/unit and the median spender losses $1 of their available $5 to taxation, this will not cause you to increase the sales price of your widgets. Raising your prices means you sell no widgets and you go out of business. Lowering your price means you capture the available cash flow and clear your inventory.
@UnderpantsWeevil
No, because the tax money is spent back into the economy. It is just taken from productive sectors and given to unproductive ones.
Spending is entirely divorced from revenue. That's how we run deficits.
We've played the "cut taxes first, cut spending later" game since Carter, and I dare you to show me three consecutive years where the deficit actually contracted.
Sectors that run high margins are defacto not productive. They are assigning large mark ups over the real cost of production.
If you want to reduce inflation without hitting productivity, you need to extract taxes from these high margin businesses.
Once shrinking your margin becomes a tax avoidance strategy, wages rise and prices fall.
Targeted high margin taxation is a proven strategy for deflating prices. But this requires a level of education that goes beyond Econ 101.
@UnderpantsWeevil
If your government is in debt, then it spent any money it took in in taxes minus the overhead.
Once you complete Econ 101, you might want to explore the idea of credit and debt in a subsequent class.
@UnderpantsWeevil
Keep guessing about my CV.