Maybe taxes are good... mathematically

[Derek McGowan]

Unfortunately I don't have the actual mathematics background (calling on Baal) or the research in hand (calling on Selene) to prove this theory of mine but stick with me a bit.

So the big problem I see with taxes is that they are involuntary. This so called theory doesn't stop that fact. Having to pay for something against your will no matter what the outcome just isn't right and that's just the way I see it...

But

Sometime I hear people complaining about taxes for other reasons, such as: if I had this money then I would be free to invest in other things...

Lets get something clear, you would not have extra money to spend on anything if you weren't taxed, not on dinners, not on investments, not on tattoos or gold chains. Why? Because if everyone's income went up then inflation would naturally knock out all gains. Sure if you or a group of people got a bonus or no taxes or whatever then you or that group would indeed be richer, but if everyone got a million dollars then naturally, through market forces alone, that million would mean nothing as prices immediately climbed to compensate.

Maybe you don't agree with the above (and I'd love to hear the opposition) but if you do then...

Wouldn't it follow that the amount of work that gets done (products produced, services rendered) is greater with the tax system because a certain bit of money is skimmed off the top, artificially reducing income which in turn prevents a certain amount of inflation (which of course still happens with the printing of money) AND yet that skimmed money is still put to work. Add to the fact that that money, going into the hands of construction crews, is itself taxed which means that the work is getting done for even less than it actually cost (at the higher inflation)

That doesn't mean that the government doesn't waste that skimmed potential. They still give it to cronies on no-bid contracts and inflated bills. And it still is being used to pay interest on loans which never should have occurred in the first place. And it still commits the cardinal sin of being involuntary but is it mathematically actually a bonus, when you look at it from a pure dollars-to-products perspective?

[Selene]

D man, can we get some agreed to sentences because I like your free thinking, however I would like to be sure what you are suggesting.

For example,

Lets get something clear, you would not have extra money to spend on anything if you weren't taxed, not on dinners, not on investments, not on tattoos or gold chains. Why? Because if everyone's income went up then inflation would naturally knock out all gains. Sure if you or a group of people got a bonus or no taxes or whatever then you or that group would indeed be richer, but if everyone got a million dollars then naturally, through market forces alone, that million would mean nothing as prices immediately climbed to compensate.

The way I understand it is that no one's "income" went up, the producer of the income would be keeping more of that income to utilize as the individual desired.

Am I not understanding this part?

A...

[jts]

The difference between being taxed and not being taxed boils down to the difference between:

a. inefficiently producing goods and services you don't want

b. efficiently producing goods and services you want

In the former case your time and energy serve you. In the latter case your time and energy serve someone else. That is the difference between freedom and slavery.

Money does not change that.

[BaalChatzaf]

The difference between being taxed and not being taxed boils down to the difference between:

a. inefficiently producing goods and services you don't want

b. efficiently producing goods and services you want

In the former case your time and energy serve you. In the latter case your time and energy serve someone else. That is the difference between freedom and slavery.

Money does not change that.

How do you propose to fund the armed forces or the police?

[Brant Gaede]

The difference between being taxed and not being taxed boils down to the difference between:

a. inefficiently producing goods and services you don't want

b. efficiently producing goods and services you want

In the former case your time and energy serve you. In the latter case your time and energy serve someone else. That is the difference between freedom and slavery.

Money does not change that.

How do you propose to fund the armed forces or the police?

Your question is not an argument only a statement of your inability to think something through off a basic statement of fact to practical reality, to wit: taxes, only they won't be so onerous and tolerated the same way one uses a public bathroom in spite of the stink knowing the bathroom at home is clean and nice--one doesn't rush home from WalMart to use it.

--Brant

[BaalChatzaf]

Your question is not an argument only a statement of your inability to think something through off a basic statement of fact to practical reality, to wit: taxes, only they won't be so onerous and tolerated the same way one uses a public bathroom in spite of the stink knowing the bathroom at home is clean and nice--one doesn't rush home from WalMart to use it.

--Brant

My question was a question not a statement. Did you note the "?" at the end ?

[Derek McGowan]

D man, can we get some agreed to sentences because I like your free thinking, however I would like to be sure what you are suggesting.

For example,

Lets get something clear, you would not have extra money to spend on anything if you weren't taxed, not on dinners, not on investments, not on tattoos or gold chains. Why? Because if everyone's income went up then inflation would naturally knock out all gains. Sure if you or a group of people got a bonus or no taxes or whatever then you or that group would indeed be richer, but if everyone got a million dollars then naturally, through market forces alone, that million would mean nothing as prices immediately climbed to compensate.

The way I understand it is that no one's "income" went up, the producer of the income would be keeping more of that income to utilize as the individual desired.

Am I not understanding this part?

A...

I'm talking about buying power more so than income I guess. Buying power increases if one is granted a credit card as it artificially increases ones ability to trade but it doesn't actually increase income in the pure form

[Derek McGowan]

In reference to Baal statement about police and to JTS. I think that some people would gladly pay taxes for certain things (is it even still called taxes if they are voluntary efforts?) Such as for the police or to raise funds for an army if we were occupied, etc.

But my post is really not about that aspect of taxes- the philosophical involuntary side but more about a simple equation, which is

Is more production available in a system that has taxation because of inflation and my above points.

[jts]

How do you propose to fund the armed forces or the police?

If you want to fight a war based on nothing but voluntary donations to the war, you would need to convince enough people to voluntarily give enough of their hard earned money to win the war. If you can't do that:

a. Maybe the war is not justified.

b. Maybe the people are stupid.

c. Maybe the people are not rational.

It would not be enough to say Iraq has weapons of mass destruction but the evidence is classified because of national security. It would not be enough to assume that weapons of mass destruction are a threat; you would need to prove it. Maybe in some peer reviewed and properly refereed journal.

If appeal to reason and rationality doesn't work and you insist on war, then you must take hard earned money from people by force in order to support what they see as mass murder.

[Francisco Ferrer]

Unfortunately I don't have the actual mathematics background (calling on Baal) or the research in hand (calling on Selene) to prove this theory of mine but stick with me a bit.

So the big problem I see with taxes is that they are involuntary. This so called theory doesn't stop that fact. Having to pay for something against your will no matter what the outcome just isn't right and that's just the way I see it...

But

Sometime I hear people complaining about taxes for other reasons, such as: if I had this money then I would be free to invest in other things...

Lets get something clear, you would not have extra money to spend on anything if you weren't taxed, not on dinners, not on investments, not on tattoos or gold chains. Why? Because if everyone's income went up then inflation would naturally knock out all gains.

Why should we suppose everyone's income would go up? When government seizes wealth, it does not seize it from everyone equally. On this point we need only refer to the progressive income tax. Nor does government distribute the loot evenly per capita throughout the population. Thus, under our much vaunted democracy, the majority-chosen government exercises the power to rob the haves (the producers or the minority of the population that pays most of the taxes) and reward the have-nots (the moochers).

Therefore, if the income tax were to disappear tomorrow morning (or at least by April 15), the only way that moochers could continue to receive their current unearned level of income would be if virtually 100% of current taxpayers were happy to remain as their benefactors and let the billions of subsidies flow unimpeded.

With income tax funding, Solar panel manufacturer Solyndra received a $536 million U.S. Energy Department loan guarantee. Is there any good reason to suppose that in a future free of the income tax, companies like Solyndra would enjoy the same economic advantages as at present? Post-income tax, would private citizens spend $175,587 for a study on the link between cocaine and the mating habits of quail?

If anything, in an income tax-free America, the federal government, the chief perpetrator of funny money and inflation, would be in a very poor position to debase the chief unit of currency.

[Brant Gaede]

It's very simple, if the government were only a small fraction of its size the real aggregate wealth in this country would be 25-35 percent higher right out of the box. Over decades we're probably talking about several times that and most of us would be happy, happy, happy--just like Greg is right now (except Greg would be even happier).

--Brant

(he might even have his own money bin)

[Selene]

Thus, under our much vaunted democracy...

It is a representative republic - see the Electoral College...

[Francisco Ferrer]

Democracy: "A system of government by the whole population or all the eligible members of a state, typically through elected representatives"

[Brant Gaede]

We got oligarchy. We always wuz one.

--Brant

rule of the airmen!--that's why we fight so many wars (the second Bush flew fighters in the air nat'l guard until he decided it was safer on the ground than in a one engine--"Good-bye, Momma!"--jet)

[Derek McGowan]

the real aggregate wealth in this country would be 25-35 percent higher right out of the box.

what does this mean in regards to the inflation I mentioned

and

how do you know?

[Brant Gaede]

the real aggregate wealth in this country would be 25-35 percent higher right out of the box.

what does this mean in regards to the inflation I mentioned

and

how do you know?

Taxes not paid for not being levied, that's all. Not a comment on the inflation you mentioned.

--Brant

[Derek McGowan]

With income tax funding, Solar panel manufacturer Solyndra received a $536 million U.S. Energy Department loan guarantee.

The progressive tax thing was a good point to bring up

but what does your above quote have to do with my equation?

Whether or not Solyndra or any other company, doing what you approve or disapprove of, has no bearing on whether MORE work is done per dollar with a tax system.

The money redistributed, whether as direct payments to citizens or to contractors IS the money skimmed off the top I spoke of in my opening post and (as I can see it) that money what have been swallowed up by inflation if it stayed with the original source.

This is a question about inflation and how taxes may bypass inflation not a opportunity to give the standard complaints about welfare or well trodden dogma.

In fact forget that this is about our world all together and just look at it in abstract terms. If my thoughts are wrong, then prove them wrong in abstract terms, forget current politics (though I did post in the politics thread

[Francisco Ferrer]

You hinted in Post #1 that the elimination of taxes would make everybody's income increase:

Lets get something clear, you would not have extra money to spend on anything if you weren't taxed, not on dinners, not on investments, not on tattoos or gold chains. Why? Because if everyone's income went up then inflation would naturally knock out all gains.

As I have shown, that would not be the case. People who are net tax producers would be richer. But net tax recipients such as Solyndra (or any rent seeker of your choice) would be poorer. There is no reason to suppose that shifting control of tax money from the government back to the rightful owner would cause an increase in the money supply.

I have no idea why you say that "that money [would] have been swallowed up by inflation if it stayed with the original source." Let's say Citizen A pays $10,000 a year in taxes. Let's say, for simplicity, that Citizen B is the sole recipient of A's loot. Taxes are then abolished. A is now $10,000 richer (although he may need to use part of that sum to pay for an insurance/security provider). But B will no longer have any part of the $10,000. Nor will the bureaucrats who once administered the redistribution. What then is the source of your promised inflation?

I would suggest that you look at the real cause of inflation which is not cutting or abolishing taxes but the manipulation of the money supply by the government.

[Derek McGowan]

You hinted in Post #1 that the elimination of taxes would make everybody's income increase:

Lets get something clear, you would not have extra money to spend on anything if you weren't taxed, not on dinners, not on investments, not on tattoos or gold chains. Why? Because if everyone's income went up then inflation would naturally knock out all gains.

As I have shown, that would not be the case. People who are net tax producers would be richer. But net tax recipients such as Solyndra (or any rent seeker of your choice) would be poorer. There is no reason to suppose that shifting control of tax money from the government back to the rightful owner would cause an increase in the money supply.

I have no idea why you say that "that money [would] have been swallowed up by inflation if it stayed with the original source." Let's say Citizen A pays $10,000 a year in taxes. Let's say, for simplicity, that Citizen B is the sole recipient of A's loot. Taxes are then abolished. A is now $10,000 richer (although he may need to use part of that sum to pay for an insurance/security provider). But B will no longer have any part of the $10,000. Nor will the bureaucrats who once administered the redistribution. What then is the source of your promised inflation?

I would suggest that you look at the real cause of inflation which is not cutting or abolishing taxes but the manipulation of the money supply by the government.

its apparent that you havent really understood what I mean. Sure my theory can still be wrong, very wrong but you aren't looking at it the way I am, possibly because I am explaining it poorly.

Its not that there would be a rise in the supply of money, its that the buying capacity of (okay, you got me- not all) of most of the population would rise and that in and of itself would cause prices to rise.

Prices rise for three (market) reasons

1. imbalance of supply and demand

2. the costs associated with producing have gone up- energy, labor costs, etc

3. the mere fact that people have more to spend.

Number three is what I'm looking at. People who make clothing for the rich charge more simply because their clients have more money to spend. College prices have gone up, largely because the government floats lots of loans which artificially increases the buying capacity of prospective students. Lets not forget that the price of anything is "what people are willing to pay" If incomes are curbed, people cant pay as much and prices have to lower if you want to stay in business/retain a customer base. If incomes go up, people are willing to spend more on dinners and then the restaurant prices in turn start creeping up.

However large the actual amount of the population who get by solely get by on government handouts is, you you might even say as high as 20% of the population, if the other 80% buying capacity increases because they no longer have to pay taxes, that will result in higher market prices. Maybe not overnight, but it certainly will. And when it does (and I'm not saying whether that is wrong or right- this is just a statement of math) that would seem to mean that less "work" would get done per dollar.

Again why, because in the tax system scenario Bob makes $100 he gets taxed 20% and keeps $80. Bob is smart to keep his housing cost at 25% of income. Market forces, based on general population buying capacity, supply housing at $20, groceries at x percentage and entertainment at x percentage (check gone )

BUT

that $20 that was taking off the top BEFORE the market calculated the prices based on #3 above, is still able to be used in what ever way.

In the non-tax scenario. Bob keeps the full 100. But now the market supplies housing at $25 and food and entertainment at relative appreciations. Check gone again but this time the full 100 is used up on LESS than it would have been used in the tax scenario

[Francisco Ferrer]

Let's look at number 3. You say that without taxation people would have more to spend. But that is only true of people who currently pay more in taxes than receive in government benefits (net tax producers). But those who are net tax receivers (welfare recipients) would have less to spend.

In abolishing taxes, we have simply shifted control of the same amount of money (tax dollars) from one group (government and its special interest clients) to another (the producers of that money).

You say, "People who make clothing for the rich charge more simply because their clients have more money to spend." Let's return to my example of Citizen A with the taxed $10,000 now back in his pocket. If Retailer X now wants to charge Citizen A $400 for a suit that a month ago cost $200, why can't A spend his money more frugally by going to Retailer Y? There is no reason to suppose Retailer Y's cost of doing business increased because control of X trillion dollars shifted from government and its clients back to the producers. There is nothing that prevents Y from increasing his sales by cutting his prices. This is how the Wal-Mart fortune was made.

Yes, "buying capacity increases because [some people] no longer have to pay taxes," but the buying capacity of those that were once receiving that money is now zero. The same U.S. economy that is now awash in untaxed dollars is simultaneously drained of the taxed dollars that were formerly pouring into it.

[Brant Gaede]

As for me, I think lowering taxes means more productive use of capital--money--than just mere consumption through government spending. Of course, I didn't properly figure that some of those redirected revenues would still be merely consumed too. If you cut government spending by a trillion dollars but taxes by only half that the net effect on the economy initially is half a trillion cut off the GNP = a major recessionary impulse. (The examples are for illustration only and constitute no policy suggestions in case anyone in government is reading this prepared to act on whatever I say.)

--Brant

you can't be too careful with your conscience these days and remember that conscience requires consciousness

[Derek McGowan]

but the buying capacity of those that were once receiving that money is now zero.

Francisco, I already addressed this... in the very response that you are responding too.

What do you think the unemployment rate is?

Official rate is 5.5% ..........but c'mon! We can easily triple that to 15% Not enough? Okay lets make it 30%. So 30% of the US population doesn't work at all. How much of that 30% do you think survive only on government benefits? Unemployment insurance only lasts 6-8 months. Some people no matter what there condition would never sign up for benefits. But still lets say that 20% of the 30% of US population survive on benefits (right now I'm leaving out those who get benefits but still make some money for reasons I will answer in a bit)

So under the no tax system. The the 20% are now under incredible pressure, they are getting nothing to survive on so half of them get jobs, 5% become permanent dependents on family and the last 5% die. Most jobs pay MORE* than benefits (not including unemployment insurance) so buying capacity goes up for the 80% who were adding to the tax pool in the first place and for the 10% with jobs now AND 5% of the population died or moved to Mexico. So with buying capacity up for 95% of the population, you don't think prices will adjust? Lets make the number 90%, you don't think it would still adjust upward? Hell, make it 80%, I'm thinking prices will rise.

*Have you ever been on welfare? I have. Single mother, four kids (divorce and restraining order because of abuse) I remember a time my mother got checks from 3 different sources and she was excited that we were riding around with "half-a-thousand dollars" That's three sources for 500 dollars. Of course this was during the 80's so the amounts are probably higher but its not like these people are getting a 40,000 dollar salary or even a 15,000 dollar salary from the government. So their buying capacity is NOT causing prices to rise. At the same time a person making 50 grand is taxed at 25% which is 12,500. If a store looks at their customer base and finds that they make 15,000 from welfare prices are x, but if stores all over the US (since 80% of population would get increased buying capacity through no taxes) saw that their customer base suddenly went from having 37,500 to spend to now having 50,000 to spend....

What problems do you see with a federal minimum wage of 10 dollars an hour? Beyond the fact that employers are being told what to pay their employees? Maybe you would say that prices will rise? Prices will rise at McDonald's because of the higher costs of labor? So that shouldn't effect you at all because you don't eat at McDonald's right? Prices wouldn't rise everywhere else simply because the the entire bottom of the income pyramid moved up.... I'm thinking they will. Why is the costs of living higher in the US than it is in Mexico? Partially because people have more to spend. Why is the costs of living higher in NYC than it is in Mississippi? Can't be that the higher wages in NYC are only in housing businesses who then have to raise rates because their costs are so high. No the average wage is higher across all sectors and that by itself makes housing costs higher. A producer puts out a product and feels around for the correct price by raising it until it falls into equilibrium for what people are willing/able to pay. If neighborhood income is higher than prices in that neighborhood are higher

What about those who do make money and still get benefits (which are not alot) or what about Solyndra. The money that they get is the bonuses production money I was talking about. They receive the money and are able to do something/anything with it AND because they aren't (the welfare queens) getting a whole lot relatively speaking, their capacity doesn't increased prices on a whole. But if 70-80% of the population, Hell you know what, 60% of the population's buying capacity went up, prices would surely adjust

Or maybe not.....

[Selene]

Derek:

As a number of individuals in libertarian and constitutional discussions have argued, direct transfer payments are the most efficient methodology from a cost and administrative perspective.

Your mom's case is a good example. Three sources means three levels of structural waste in terms of the persons at each agency/program.

I know Reagan made a famous comment about the "Great Society" that pretty much ended with a chuckle about everyone can see there is a lot of overhead here.

Would that effect your argument?

A...

[Derek McGowan]

Derek:

Would that effect your argument?

A...

The amounts of overhead doesn't effect my argument only because the money that goes into the mid managers pockets is still money that is being used without it effecting the inflation rate. The inflation rate based on one person having 10 dollar more capacity vs that person having a 7 dollar capacity and 6 others (the beneficiaries of tax payments) getting an extra 50cent on their already low 3 dollar capacity.

I do feel that the money is not spent as effectively as it could be but could it be spent at all if inflation wiped it out.

[Francisco Ferrer]

but the buying capacity of those that were once receiving that money is now zero.

Francisco, I already addressed this... in the very response that you are responding too.

What do you think the unemployment rate is?

Official rate is 5.5% ..........but c'mon! We can easily triple that to 15% Not enough? Okay lets make it 30%. So 30% of the US population doesn't work at all. How much of that 30% do you think survive only on government benefits? Unemployment insurance only lasts 6-8 months. Some people no matter what there condition would never sign up for benefits. But still lets say that 20% of the 30% of US population survive on benefits (right now I'm leaving out those who get benefits but still make some money for reasons I will answer in a bit)

So under the no tax system. The the 20% are now under incredible pressure, they are getting nothing to survive on so half of them get jobs, 5% become permanent dependents on family and the last 5% die. Most jobs pay MORE* than benefits (not including unemployment insurance) so buying capacity goes up for the 80% who were adding to the tax pool in the first place and for the 10% with jobs now AND 5% of the population died or moved to Mexico. So with buying capacity up for 95% of the population, you don't think prices will adjust? Lets make the number 90%, you don't think it would still adjust upward? Hell, make it 80%, I'm thinking prices will rise.

*Have you ever been on welfare? I have. Single mother, four kids (divorce and restraining order because of abuse) I remember a time my mother got checks from 3 different sources and she was excited that we were riding around with "half-a-thousand dollars" That's three sources for 500 dollars. Of course this was during the 80's so the amounts are probably higher but its not like these people are getting a 40,000 dollar salary or even a 15,000 dollar salary from the government. So their buying capacity is NOT causing prices to rise. At the same time a person making 50 grand is taxed at 25% which is 12,500. If a store looks at their customer base and finds that they make 15,000 from welfare prices are x, but if stores all over the US (since 80% of population would get increased buying capacity through no taxes) saw that their customer base suddenly went from having 37,500 to spend to now having 50,000 to spend....

What problems do you see with a federal minimum wage of 10 dollars an hour? Beyond the fact that employers are being told what to pay their employees? Maybe you would say that prices will rise? Prices will rise at McDonald's because of the higher costs of labor? So that shouldn't effect you at all because you don't eat at McDonald's right? Prices wouldn't rise everywhere else simply because the the entire bottom of the income pyramid moved up.... I'm thinking they will. Why is the costs of living higher in the US than it is in Mexico? Partially because people have more to spend. Why is the costs of living higher in NYC than it is in Mississippi? Can't be that the higher wages in NYC are only in housing businesses who then have to raise rates because their costs are so high. No the average wage is higher across all sectors and that by itself makes housing costs higher. A producer puts out a product and feels around for the correct price by raising it until it falls into equilibrium for what people are willing/able to pay. If neighborhood income is higher than prices in that neighborhood are higher

What about those who do make money and still get benefits (which are not alot) or what about Solyndra. The money that they get is the bonuses production money I was talking about. They receive the money and are able to do something/anything with it AND because they aren't (the welfare queens) getting a whole lot relatively speaking, their capacity doesn't increased prices on a whole. But if 70-80% of the population, Hell you know what, 60% of the population's buying capacity went up, prices would surely adjust

Or maybe not.....

If the government taxed people and simply held the taxed funds, yes, the effect on the economy would be deflationary. Conversely, a sudden release of the unspent, confiscated funds would be inflationary. However, that is not the case today; nor has it ever been. Not only does the government redistribute the stolen loot (in order to buy votes), it spends more than it takes in through the Federal Reserve's expansion of the money supply. It may be true that dependent families do not make a windfall, but that does not mean that the stolen dollars are not returning to circulation. A study has shown that only 30 cents on every dollar spent on welfare reaches the intended recipients. The remainder of the dollar is not stowed under Uncle Sam's mattress. The other 70 cents goes to the redistributors, in other words, the bureaucrats and those that thrive on government contracts.

Let X equal the number of dollars taken in by the government through taxation. The buying power of all taxpayers has been reduced by X. But X did not disappear into some vault at Fort Knox. It was paid out in the form of moocher benefits; federal worker paychecks; and the purchase of office supplies, office space, computers, janitors, carpet layers, airplane tickets, fuel allowances and various other private vendor products and services. The moochers, the redistributors, and all those that attend them did not take their tax generated dollars home and stuff them into piggy banks. No, like the rest of the population, they spent the money on new sneakers, big screen TV's, and iPhones.

In order to prove that ending taxation is going to add an additional X number of dollars to the economy, you would have to show that X has not been released into the economy already.

As to your point is that the former welfare recipients are now going to have to get jobs--you still have not shown that there is inflationary pressure. Companies do not hire people simply to keep a chair warm. Employees are put on payroll to perform productive tasks. If there are more people productively working, all things being equal, there are more goods being produced. Thus there will not be a greater number of dollars chasing the same or fewer goods. Therefore, no inflation.