Re: Volatility

["John O'Donnell" <jackodonnell@xxxxxxxx>]

Harry Veeder wrote:

<<SNIP>>

> I am forwarding some more thoughts on this subject
> that I exchanged with Henry C.K. Liu off line. I hope Henry does not mind.
> The point is taxation can be designed to improve the quality of growth
> without being an *overall* hinderance to the level of growth.
>
> --------------------
> >
> >
> >Harry Veeder wrote:
> >
> >>
> >> Why does nobody (in government) ever consider taxation as an instrument of
> >> stock market regulation? A system of stock market taxes would be effective
> >> if they used the speed of electronic feedback rather than relying on the
> >> speed of human (eg. the FED) feedback. Such taxes could deflate "bubbles"
> >> before they "burst".

Actually, the "speed of electronic feedback" is not needed,
only the feedback signal to respond to the effect of changes
is needed. The speed of the response is limited by the
ability to measure the effect(s) following implemented
changes.

However, to affect bubbles the feedback signal is not
required. All that is needed is a tax that acts in
opposition to price increases such that the higher the price
goes the higher goes the tax thereby reducing the perceived
value of the common stock and if the price falls the
reduction of the tax lessens the damage to its value. This
is an outcome, though not the purpose, of the "monopoly tax"
I present in my _Three Steps to Economic Freedom_ on line
at: http://www.geocities.com/CapitolHill/1067/c00r4.html
[For anyone interested I can send a HTML copy on request
that eliminates the gepcites ads in the online copy.]

> >Henry C.k. Liu:
> >
> >Interesting notion.  The politcal resistence would be almost
> >insurmountable. In recent
> >decades, American phobia against taxes has become bipartisan.  Secondly, tax rates
> >changes are much more cumbersome to effectuate than interest rates in the
> >US system of
> >government.  Or are you talking about a new tax in addition to income and
> >capital gain?
>
> No, I'm thinking of new taxes. Taxes aimed at certain areas of the stock
> market which would automatically decrease or increase as conditions
> improved or declined in the stock market. The government would debate
> the purpose and design of a tax program but once implemented they would
> be monitored by an independent body and their day to day (or hour to hour
> or even minute by minute) adjustment would be largely
> automatic.

The "Monopoly Tax" would be automatic but the measure [i.e.
-- the feedback signal] to define the amount of tax is the
growth rate of the total value of common stock.

> The trouble is most contemporary economist simply don't even consider
> taxation as a tool to regulate and promote growth. It is simply a
> mechanism for legally taking money from people so that it may be
> redistributed and reinvested.

I suppose that's why I'm a "crank" and not an economist.

> Taxation has become nothing more than a necessary evil and economists
> spend their time advising goverment how the burden should be distributed
> so that it will minimize harm to the economy and individuals. Today, the
> idea that somes forms of taxation (without redistribution) could promote
> growth would, at first, sound strange to workers, almost all businessman,
> most politicians and many economists.

Although the monopoly tax optimizes growth of capital [i.e.
the value of common stock] independent from any
redistribution, the fact remains that a rational
redistribution can also be determined that also can be
optimized to grow t an economy. It's called a "Citizen's
Dividend" in _Three Steps, etc._ and accomplishes the growth
optimization by the same function as the monopoly tax. That
is, it redistributes the costs of production from "variable"
to "fixed" and thereby encourages lower retail prices that
encourage greater economic activity.

> For *these* taxes to implemented successfully, I believe it is
> essential that the taxes not be kept as government revenue. The money should
> simply be destroyed after being collected. It is only the records of
> taxation that are important to keep. That way the tax has a singular
> purpose.

The irrelevance of government debt and deficits payable in
the issue of the government that substitutes interest
bearing notes for non interest bearing notes as an
accounting process is demonstrated in a brief article _Can
It Be?_ at: This certainty, along with the obvious but
disbelieved certainty of dQ/dM being zero, is also the
reason government debt can be used solely to maintain the
value of the currency without any concern about the nominal
amounts outstanding.

<<SNIP>>

--
			-- jbod

		Tax Privilege, Not People
___________________________________________________
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