Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Kuzi's lovely horse/apple farm example is a perfect demonstration of a micro-economic view. It equates dollars in hand (in this case IOU's) with actual wealth. In a strictly micro-economic sense, that is true. However, if that wealth does not continue to flow through the economy, it becomes worth less.
ok. you are clearly using the equasion M*V = P*Q money supply times money velocity equals nominal output. (price level times quantity of goods and services produced) what you are saying is that you are looking to increase "V" what i am saying is that by taxation you are reducing "M" here is where the micro and macro connection/ relationship is made. once "M" is reduced people will have less consumer confidence and therefore you will have less "V" as well. and this explains why in the NPR article and in my evolution of money article government works programs will not work in a economic downturn.
again... you're saying that taxation reduces M... it doesn't.. M is fixed (except when we print more money, then it goes up). The government doesn't take your money via taxes and incinerate it. In a micro world, taxation vaporizes money. In a macro world, "M" in your equation is a fixed value.
Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Ok, that still doesn't help your case any... If the Apple farmer stops farming just to live off of the government, then not only has he become a drain on our wallet, but he is no longer producing a good for us to trade with the neighbors (other countries.) Creating a shortage of apples in his country which will drive the price up hurting the horse rancher even more. Then he decides to import apples from another country but the government taxes him for that one too....
again... you're saying that taxation reduces M... it doesn't.. M is fixed (except when we print more money, then it goes up). The government doesn't take your money via taxes and incinerate it. In a micro world, taxation vaporizes money. In a macro world, "M" in your equation is a fixed value.
Money basically does vanish into thin air when the government has it. BEFORE the Porkulous Bill there was already a $9 billion dollar surplus nationally in the funds for highways and roads... not there are Billions more yet very little of it is being spent... That in NO WAY HELPS THE ECONOMY! Period, your entired Macro/Micro diatribe is flawed because there are grey areas. AKA The Government, who is a seperate entity that does hold a LARGE amount of our money.
again... you're saying that taxation reduces M... it doesn't.. M is fixed (except when we print more money, then it goes up). The government doesn't take your money via taxes and incinerate it. In a micro world, taxation vaporizes money. In a macro world, "M" in your equation is a fixed value.
it is not a fixed value in this instance because we are going to be using the money that we are being taxed to also pay off the debt that we as a nation owe to other countries. it is leaving our system. It may as well be incinerated.
Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Ok, that still doesn't help your case any... If the Apple farmer stops farming just to live off of the government, then not only has he become a drain on our wallet, but he is no longer producing a good for us to trade with the neighbors (other countries.) Creating a shortage of apples in his country which will drive the price up hurting the horse rancher even more. Then he decides to import apples from another country but the government taxes him for that one too....
Good job, Puro.. You're finally getting to the next step in the macro example, but in order to do this, we need to start talking about a society with a larger number of individuals. The person who chooses to quit producing apples and instead "live off the government" becomes a vehicle for rapid circulation of currency. That person is provided enough money to purchase essentials, but he's not going to be buying any yachts. Now, the real smart guy is his competitor, who chooses to continue selling apples, and suddenly sees his market share increased. He will produce and sell more apples. His income and wealth will be increased. His taxes, of course, will be increased, but only as a percentage of his increased income. His net income will be increased.
Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Ok, that still doesn't help your case any... If the Apple farmer stops farming just to live off of the government, then not only has he become a drain on our wallet, but he is no longer producing a good for us to trade with the neighbors (other countries.) Creating a shortage of apples in his country which will drive the price up hurting the horse rancher even more. Then he decides to import apples from another country but the government taxes him for that one too....
Good job, Puro.. You're finally getting to the next step in the macro example, but in order to do this, we need to start talking about a society with a larger number of individuals. The person who chooses to quit producing apples and instead "live off the government" becomes a vehicle for rapid circulation of currency. That person is provided enough money to purchase essentials, but he's not going to be buying any yachts. Now, the real smart guy is his competitor, who chooses to continue selling apples, and suddenly sees his market share increased. He will produce and sell more apples. His income and wealth will be increased. His taxes, of course, will be increased, but only as a percentage of his increased income. His net income will be increased.
OR
he sees that everything is provided to that guy to survive. the farmer thinks to himself, "self, why are you working so much harder and only have a marginally better life than the guy who is mooching? i should stop working and start relaxing. ill let the government take care of me" this is where the problem begins
Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Ok, that still doesn't help your case any... If the Apple farmer stops farming just to live off of the government, then not only has he become a drain on our wallet, but he is no longer producing a good for us to trade with the neighbors (other countries.) Creating a shortage of apples in his country which will drive the price up hurting the horse rancher even more. Then he decides to import apples from another country but the government taxes him for that one too....
Good job, Puro.. You're finally getting to the next step in the macro example, but in order to do this, we need to start talking about a society with a larger number of individuals. The person who chooses to quit producing apples and instead "live off the government" becomes a vehicle for rapid circulation of currency. That person is provided enough money to purchase essentials, but he's not going to be buying any yachts. Now, the real smart guy is his competitor, who chooses to continue selling apples, and suddenly sees his market share increased. He will produce and sell more apples. His income and wealth will be increased. His taxes, of course, will be increased, but only as a percentage of his increased income. His net income will be increased.
Or, he is bumped into a higher tax bracket and actually brings home LESS money and is working twice as hard to to produce more apples. After a while he sees it is easier to live off of the government too. And don't say that couldn't happen because it has happened to me. I got a raise which put me into a higher tax bracket and I actually brought home LESS that I was before. Your equations just don't add up. As Kuzi said, Macro and Micro go hand in hand. They must co-exist in order for there to be balance... It isn't like Supply side and Keynsian. They aren't two opposite methods.
you are right on this. that is why i am not using the word "money" real wealth includes some money, but it also includes goods, both durable and non, and services. or in short: things with value that can be bought and sold and are created by people for such action this is why we never should have left the gold standard.... but thats a different arguement
Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Ok, that still doesn't help your case any... If the Apple farmer stops farming just to live off of the government, then not only has he become a drain on our wallet, but he is no longer producing a good for us to trade with the neighbors (other countries.) Creating a shortage of apples in his country which will drive the price up hurting the horse rancher even more. Then he decides to import apples from another country but the government taxes him for that one too....
Good job, Puro.. You're finally getting to the next step in the macro example, but in order to do this, we need to start talking about a society with a larger number of individuals. The person who chooses to quit producing apples and instead "live off the government" becomes a vehicle for rapid circulation of currency. That person is provided enough money to purchase essentials, but he's not going to be buying any yachts. Now, the real smart guy is his competitor, who chooses to continue selling apples, and suddenly sees his market share increased. He will produce and sell more apples. His income and wealth will be increased. His taxes, of course, will be increased, but only as a percentage of his increased income. His net income will be increased.
OR
he sees that everything is provided to that guy to survive. the farmer thinks to himself, "self, why are you working so much harder and only have a marginally better life than the guy who is mooching? i should stop working and start relaxing. ill let the government take care of me" this is where the problem begins
Let him do that.. he can sell the Mercedes, and the 5,000 sq ft home... go live in public housing on food stamps and buy used clothes and live in a crime-ridden area. Great choice... and now that's one more guy out of the wealth-generating pool of individuals, and one less person to accumulate true wealth.
Or, he is bumped into a higher tax bracket and actually brings home LESS money and is working twice as hard to to produce more apples.
Stop embarrassing yourself by propagating this myth. This is not how a progressive tax works.
Your entire income is not taxed at the new level. Only income above the threshold is taxed at the new level. It is mathematically impossible, in a progressive tax system, to make more gross income and have the resulting tax give you a lower net income.
you are right on this. that is why i am not using the word "money" real wealth includes some money, but it also includes goods, both durable and non, and services. or in short: things with value that can be bought and sold and are created by people for such action this is why we never should have left the gold standard.... but thats a different arguement
All of that is true... but if the economy is moving slowly, people cannot afford to buy as many goods and services.. therefore the demand goes down and so does the value of those goods and services. Therefore, the "wealth" is also reduced. They are the same. It's been a while since I've given any thought about the deviation from the gold standard, but at no time in the past have I ever concluded that it was a good idea.
Or, he is bumped into a higher tax bracket and actually brings home LESS money and is working twice as hard to to produce more apples.
Stop embarrassing yourself by propagating this myth. This is not how a progressive tax works.
Your entire income is not taxed at the new level. Only income above the threshold is taxed at the new level. It is mathematically impossible, in a progressive tax system, to make more gross income and have the resulting tax give you a lower net income.
thats not true. it happened to my father also. ... of course this was before the reagan tax cuts. it did happen to puro.... didnt you read the rest of his post?
Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Ok, that still doesn't help your case any... If the Apple farmer stops farming just to live off of the government, then not only has he become a drain on our wallet, but he is no longer producing a good for us to trade with the neighbors (other countries.) Creating a shortage of apples in his country which will drive the price up hurting the horse rancher even more. Then he decides to import apples from another country but the government taxes him for that one too....
Good job, Puro.. You're finally getting to the next step in the macro example, but in order to do this, we need to start talking about a society with a larger number of individuals. The person who chooses to quit producing apples and instead "live off the government" becomes a vehicle for rapid circulation of currency. That person is provided enough money to purchase essentials, but he's not going to be buying any yachts. Now, the real smart guy is his competitor, who chooses to continue selling apples, and suddenly sees his market share increased. He will produce and sell more apples. His income and wealth will be increased. His taxes, of course, will be increased, but only as a percentage of his increased income. His net income will be increased.
OR
he sees that everything is provided to that guy to survive. the farmer thinks to himself, "self, why are you working so much harder and only have a marginally better life than the guy who is mooching? i should stop working and start relaxing. ill let the government take care of me" this is where the problem begins
Let him do that.. he can sell the Mercedes, and the 5,000 sq ft home... go live in public housing on food stamps and buy used clothes and live in a crime-ridden area. Great choice... and now that's one more guy out of the wealth-generating pool of individuals, and one less person to accumulate true wealth.
you are assuming that the guy has all of those things. if he is working hard producing and just squeaking by and then looks over to the guy not working and living not much worse off than him... thats the problem.
you are right on this. that is why i am not using the word "money" real wealth includes some money, but it also includes goods, both durable and non, and services. or in short: things with value that can be bought and sold and are created by people for such action this is why we never should have left the gold standard.... but thats a different arguement
All of that is true... but if the economy is moving slowly, people cannot afford to buy as many goods and services.. therefore the demand goes down and so does the value of those goods and services. Therefore, the "wealth" is also reduced. They are the same. It's been a while since I've given any thought about the deviation from the gold standard, but at no time in the past have I ever concluded that it was a good idea.
so if the had more money in their pocket to spend on goods and services via lower taxes they could create more wealth
Or, he is bumped into a higher tax bracket and actually brings home LESS money and is working twice as hard to to produce more apples.
Stop embarrassing yourself by propagating this myth. This is not how a progressive tax works.
Your entire income is not taxed at the new level. Only income above the threshold is taxed at the new level. It is mathematically impossible, in a progressive tax system, to make more gross income and have the resulting tax give you a lower net income.
thats not true. it happened to my father also. ... of course this was before the reagan tax cuts. it did happen to puro.... didnt you read the rest of his post?
IT IS NOT TRUE! Talk to any accountant you want.. this is not how progressive taxes work!! For the love of God, stop demonstrating your complete lack of understanding in this! If you are ignorant enough to continue to believe this, then I just need to stop wasting my time in this discussion. Your federal taxes are applied progressively, not against your entire income.
I will not listen to anecdotes about one person's income experience based on their paychecks, without looking in detail at all of their pay stubs for the year, and the tax code for that year. I promise you there will not be one example where a greater gross income, assuming it is all base salary and not a different mix of base and bonus, resulted in a lower net take-home pay.
you are right on this. that is why i am not using the word "money" real wealth includes some money, but it also includes goods, both durable and non, and services. or in short: things with value that can be bought and sold and are created by people for such action this is why we never should have left the gold standard.... but thats a different arguement
All of that is true... but if the economy is moving slowly, people cannot afford to buy as many goods and services.. therefore the demand goes down and so does the value of those goods and services. Therefore, the "wealth" is also reduced. They are the same. It's been a while since I've given any thought about the deviation from the gold standard, but at no time in the past have I ever concluded that it was a good idea.
so if the had more money in their pocket to spend on goods and services via lower taxes they could create more wealth
more money, yes... but if that money became worth a lot less while it sat in their pocket, they could buy less goods and services... therefore, no.. they would not create more wealth.
Alright.. last one... I am going to describe the way that a progressive tax is applied, in very simple terms.
Let's assume a tax code with four tax brackets: 0%, 10%, 20%, and 30%.
If you make $100 or less, your tax bracket is 0%
If you make $100.01 - $200.00, your tax bracket is 10%
If you make $200.01 - $300.00, your tax bracket is 20%
If you make $300.01 or more, your tax bracket is 30%
If you make $100.00 this year, you pay no taxes. Your net income is $100.00
If you make $200.00 this year, you pay $10.00 in taxes (0% of your first $100, 10% on the second $100). Your net income is $190.00
If you make $201.00 this year, you pay $10.20 in taxes (0% of your first $100, 10% on the second $100, and 20% on that last dollar). Your net income is $190.80
If you don't understand the above example, and agree that it is the way a progressive tax system works, and agree that our federal income taxes are applied using a progressive tax model, then your cognitive dissonance is such that I cannot carry on a worthwhile discussion with you on the topic. If you say again that it is possible for someone to make less money on higher wages due to a shift in tax brackets, then you have demonstrated an inability to understand this math which is taught to students before they enter high school. If you can't understand this basic concept, then you'll never understand macro-economics. Micro-economic concepts are taught to children in elementary school. Macro is stuff for high school and college students.
Alright.. last one... I am going to describe the way that a progressive tax is applied, in very simple terms.
Let's assume a tax code with four tax brackets: 0%, 10%, 20%, and 30%.
If you make $100 or less, your tax bracket is 0%
If you make $100.01 - $200.00, your tax bracket is 10%
If you make $200.01 - $300.00, your tax bracket is 20%
If you make $300.01 or more, your tax bracket is 30%
If you make $100.00 this year, you pay no taxes. Your net income is $100.00
If you make $200.00 this year, you pay $10.00 in taxes (0% of your first $100, 10% on the second $100). Your net income is $190.00
If you make $201.00 this year, you pay $10.20 in taxes (0% of your first $100, 10% on the second $100, and 20% on that last dollar). Your net income is $190.80
If you don't understand the above example, and agree that it is the way a progressive tax system works, and agree that our federal income taxes are applied using a progressive tax model, then your cognitive dissonance is such that I cannot carry on a worthwhile discussion with you on the topic. If you say again that it is possible for someone to make less money on higher wages due to a shift in tax brackets, then you have demonstrated an inability to understand this math which is taught to students before they enter high school. If you can't understand this basic concept, then you'll never understand macro-economics. Micro-economic concepts are taught to children in elementary school. Macro is stuff for high school and college students.
I will admit I may be wrong, but I will **** promise you my next check was LESS after I got my raise that it was before for the same number of hours. I'm not saying it was because of taxes so I'm going to look back at those and find out what it was and post it when I get it figured out. No need to blow a gasket on this one. You sound like the kid on the play ground. "You guys are all stupid! I'm taking my football and going home!" haha
Not knowing anything about your situation, my first inclination is that the timing was such that your gross income on the year had pushed you into a new bracket. If you hadn't received your raise, your net take-home pay would most likely have still been lower. You see this all the time with people who are employed part-time, and with permanent employees starting a new job. Your taxes are withheld according to the gross income that you have made thus far. When you cross each threshold, your withholding rate increases. This has nothing to do with any raise you may have received.
you are right on this. that is why i am not using the word "money" real wealth includes some money, but it also includes goods, both durable and non, and services. or in short: things with value that can be bought and sold and are created by people for such action this is why we never should have left the gold standard.... but thats a different arguement
All of that is true... but if the economy is moving slowly, people cannot afford to buy as many goods and services.. therefore the demand goes down and so does the value of those goods and services. Therefore, the "wealth" is also reduced. They are the same. It's been a while since I've given any thought about the deviation from the gold standard, but at no time in the past have I ever concluded that it was a good idea.
so if the had more money in their pocket to spend on goods and services via lower taxes they could create more wealth
more money, yes... but if that money became worth a lot less while it sat in their pocket, they could buy less goods and services... therefore, no.. they would not create more wealth.
and how is it becoming worth less? by government spending of money that has no wealth behind it because it has just been printed and has zero wealth behind it. therefore this spending is not helping it is hurting by inflating the dollar.
AND its not sitting in their pocket if they are spending it. you are again assuming that everyone will save every penny they get. that is not always the case.
if i had a few hundred bucks extra hangin out there are many things i could and would do with it. my porch (smoking room) needs new decking, i need a new car, i want more cigars,...
what is stopping me from buying those things right this minute? not the economy as a unit, but the lack of personal finances.
then i look at my paycheck. 275 of it is going to the government. that is more than my current car payment. i could use that. I would spend it. and so would many, many others
you are right on this. that is why i am not using the word "money" real wealth includes some money, but it also includes goods, both durable and non, and services. or in short: things with value that can be bought and sold and are created by people for such action this is why we never should have left the gold standard.... but thats a different arguement
All of that is true... but if the economy is moving slowly, people cannot afford to buy as many goods and services.. therefore the demand goes down and so does the value of those goods and services. Therefore, the "wealth" is also reduced. They are the same. It's been a while since I've given any thought about the deviation from the gold standard, but at no time in the past have I ever concluded that it was a good idea.
so if the had more money in their pocket to spend on goods and services via lower taxes they could create more wealth
more money, yes... but if that money became worth a lot less while it sat in their pocket, they could buy less goods and services... therefore, no.. they would not create more wealth.
and how is it becoming worth less? by government spending of money that has no wealth behind it because it has just been printed and has zero wealth behind it. therefore this spending is not helping it is hurting by inflating the dollar.
No.. again.. I said in Macro "M" is fixed. So we're not talking about the government printing more money.. that increases M. It becomes worth less because it's not moving. It becomes worth less because it's sitting in their pockets.
AND its not sitting in their pocket if they are spending it. you are again assuming that everyone will save every penny they get. that is not always the case.
if i had a few hundred bucks extra hangin out there are many things i could and would do with it. my porch (smoking room) needs new decking, i need a new car, i want more cigars,...
what is stopping me from buying those things right this minute? not the economy as a unit, but the lack of personal finances.
then i look at my paycheck. 275 of it is going to the government. that is more than my current car payment. i could use that. I would spend it. and so would many, many others
Where did I say they are saving every penny they get? I said they are saving some amount greater than zero. In other words, they are not spending every penny they get. If you got that full 275 back, how much of it would you save? If the answer is not zero, then you aren't as useful to the overall economy at this moment as the bum on the street. He won't save a dime. You are, however, smarter with respect to your own money, but that goes back to micro.
you are right on this. that is why i am not using the word "money" real wealth includes some money, but it also includes goods, both durable and non, and services. or in short: things with value that can be bought and sold and are created by people for such action this is why we never should have left the gold standard.... but thats a different arguement
All of that is true... but if the economy is moving slowly, people cannot afford to buy as many goods and services.. therefore the demand goes down and so does the value of those goods and services. Therefore, the "wealth" is also reduced. They are the same. It's been a while since I've given any thought about the deviation from the gold standard, but at no time in the past have I ever concluded that it was a good idea.
so if the had more money in their pocket to spend on goods and services via lower taxes they could create more wealth
more money, yes... but if that money became worth a lot less while it sat in their pocket, they could buy less goods and services... therefore, no.. they would not create more wealth.
and how is it becoming worth less? by government spending of money that has no wealth behind it because it has just been printed and has zero wealth behind it. therefore this spending is not helping it is hurting by inflating the dollar.
No.. again.. I said in Macro "M" is fixed. So we're not talking about the government printing more money.. that increases M. It becomes worth less because it's not moving. It becomes worth less because it's sitting in their pockets.
the problem is the M is NOT fixed. in this situation it is not fixed. more money is being printed. we are borrowing money from others. we are bringing more money (not wealth) into the US artificially. the M is not fixed at all. we are going to have in inflated dollar that will take generations to pay off because wealth was not created in the system.
AND its not sitting in their pocket if they are spending it. you are again assuming that everyone will save every penny they get. that is not always the case.
if i had a few hundred bucks extra hangin out there are many things i could and would do with it. my porch (smoking room) needs new decking, i need a new car, i want more cigars,...
what is stopping me from buying those things right this minute? not the economy as a unit, but the lack of personal finances.
then i look at my paycheck. 275 of it is going to the government. that is more than my current car payment. i could use that. I would spend it. and so would many, many others
Where did I say they are saving every penny they get? I said they are saving some amount greater than zero. In other words, they are not spending every penny they get. If you got that full 275 back, how much of it would you save? If the answer is not zero, then you aren't as useful to the overall economy at this moment as the bum on the street. He won't save a dime. You are, however, smarter with respect to your own money, but that goes back to micro.
but im still spending more than the 275 that i am handing over to the government AND i retain my civil liberties and rights as a property owner in the US. I earned that money. it is my right to spend it as i see fit. If i want to save it i should be aloud to. not FORCED to hand what i make over to the government so others prosper. that IS socialism. That is the exact opposite of the american dream.
the US was founded on individual rights and liberties, not mob rule. it is the governments job to make sure your rights are not infringed on. THATS IT. it is not their job to regulate every bit of our lives. it is not their job to ensure that we all have good jobs. it is not their job to give everyone healthcare for free. the founding fathers made this country so that we could get out from under the thumb of an oppressive government. we are now turning into that government with our higher taxes and our rights being eroded via taxation.
That's a very eloquent piece of writing by a renowned fictional author (aka non-economist). I presume this is from Atlas Shrugged.
This is a more blunt way of making my "Monopoly Game" analogy that I posted on here. I don't think either one represents particularly relevant factual analysis based on years of economic research by professionals.
AND its not sitting in their pocket if they are spending it. you are again assuming that everyone will save every penny they get. that is not always the case.
if i had a few hundred bucks extra hangin out there are many things i could and would do with it. my porch (smoking room) needs new decking, i need a new car, i want more cigars,...
what is stopping me from buying those things right this minute? not the economy as a unit, but the lack of personal finances.
then i look at my paycheck. 275 of it is going to the government. that is more than my current car payment. i could use that. I would spend it. and so would many, many others
Where did I say they are saving every penny they get? I said they are saving some amount greater than zero. In other words, they are not spending every penny they get. If you got that full 275 back, how much of it would you save? If the answer is not zero, then you aren't as useful to the overall economy at this moment as the bum on the street. He won't save a dime. You are, however, smarter with respect to your own money, but that goes back to micro.
but im still spending more than the 275 that i am handing over to the government AND i retain my civil liberties and rights as a property owner in the US. I earned that money. it is my right to spend it as i see fit. If i want to save it i should be aloud to. not FORCED to hand what i make over to the government so others prosper. that IS socialism. That is the exact opposite of the american dream.
But you're spending less than all of it. If there is one thing our government has demonstrated an incredible capability of doing, it's spending all of its money. The money comes back to you in greater amounts. Once again, you're assuming that once the $275 is gone, you see none of it ever again. That is a very simplistic view.
Comments
M*V = P*Q
money supply times money velocity equals nominal output. (price level times quantity of goods and services produced)
what you are saying is that you are looking to increase "V"
what i am saying is that by taxation you are reducing "M"
here is where the micro and macro connection/ relationship is made.
once "M" is reduced people will have less consumer confidence and therefore you will have less "V" as well.
and this explains why in the NPR article and in my evolution of money article government works programs will not work in a economic downturn.
he sees that everything is provided to that guy to survive. the farmer thinks to himself, "self, why are you working so much harder and only have a marginally better life than the guy who is mooching? i should stop working and start relaxing. ill let the government take care of me"
this is where the problem begins
real wealth includes some money, but it also includes goods, both durable and non, and services. or in short: things with value that can be bought and sold and are created by people for such action
this is why we never should have left the gold standard.... but thats a different arguement
Your entire income is not taxed at the new level. Only income above the threshold is taxed at the new level. It is mathematically impossible, in a progressive tax system, to make more gross income and have the resulting tax give you a lower net income.
it did happen to puro.... didnt you read the rest of his post?
I will not listen to anecdotes about one person's income experience based on their paychecks, without looking in detail at all of their pay stubs for the year, and the tax code for that year. I promise you there will not be one example where a greater gross income, assuming it is all base salary and not a different mix of base and bonus, resulted in a lower net take-home pay.
Let's assume a tax code with four tax brackets: 0%, 10%, 20%, and 30%.
If you make $100 or less, your tax bracket is 0%
If you make $100.01 - $200.00, your tax bracket is 10%
If you make $200.01 - $300.00, your tax bracket is 20%
If you make $300.01 or more, your tax bracket is 30%
If you make $100.00 this year, you pay no taxes. Your net income is $100.00
If you make $200.00 this year, you pay $10.00 in taxes (0% of your first $100, 10% on the second $100). Your net income is $190.00
If you make $201.00 this year, you pay $10.20 in taxes (0% of your first $100, 10% on the second $100, and 20% on that last dollar). Your net income is $190.80
If you don't understand the above example, and agree that it is the way a progressive tax system works, and agree that our federal income taxes are applied using a progressive tax model, then your cognitive dissonance is such that I cannot carry on a worthwhile discussion with you on the topic. If you say again that it is possible for someone to make less money on higher wages due to a shift in tax brackets, then you have demonstrated an inability to understand this math which is taught to students before they enter high school. If you can't understand this basic concept, then you'll never understand macro-economics. Micro-economic concepts are taught to children in elementary school. Macro is stuff for high school and college students.
if i had a few hundred bucks extra hangin out there are many things i could and would do with it. my porch (smoking room) needs new decking, i need a new car, i want more cigars,...
what is stopping me from buying those things right this minute? not the economy as a unit, but the lack of personal finances.
then i look at my paycheck. 275 of it is going to the government. that is more than my current car payment. i could use that. I would spend it. and so would many, many others
the US was founded on individual rights and liberties, not mob rule. it is the governments job to make sure your rights are not infringed on. THATS IT. it is not their job to regulate every bit of our lives. it is not their job to ensure that we all have good jobs. it is not their job to give everyone healthcare for free. the founding fathers made this country so that we could get out from under the thumb of an oppressive government. we are now turning into that government with our higher taxes and our rights being eroded via taxation.
This is a more blunt way of making my "Monopoly Game" analogy that I posted on here. I don't think either one represents particularly relevant factual analysis based on years of economic research by professionals.