Re: What if and Why of Zero Taxation

["Schulte-baeuminghaus" <schulte.baeuminghaus@xxxxxxxxx>]

Thanks, John. Very interesting
However, may I say -

If you want low taxes and no inflation, then keep interest rates low, do
everything you can to encourage investment - discourage the holding of money
as a store of value - and watch productivity go up and production leap ahead
with it.
There's no mystery about this.
It's simple and it's valid.
Investment - private and public - but not casino-type speculation - makes a
community rich, if the aggregate investment is kept high; it makes the
community poor if it stays low.
If private investment begins to lag a bit, make sure interest rates are kept
low but ALSO GET IN THERE WITH PUBLIC INVESTMENT.
The two go together to keep us all rich - or, for those at the bottom of the
income stakes, less poor.
Never get yourself into a position in which you think public investment is
for the birds.
If you do, you're likely to join the birds picking up the left-overs on the
street.
Public investment - bring it back into fashion.
That doesn't mean you discourage private investment - again, real
investment,
not gambling.
On the contrary, encourage it to the hilt.
Have a look around at countries which have had high aggregate investment -
public and private - or low aggregate investment in the past - or in the
near-present.
I'm not being smart in saying all this.
Many others have said it.
Sadly, our policymakers and their gifted gurus have too often forgotten it.
As for the Americans, Benjamin Franklin said it - or most of it anyway - two
hundred years ago.
You don't believe me? Have a look.

James Cumes

----- Original Message -----
From: John Gelles <johng@xxxxxxxxxx>
To: Post Keynesian Thought <pkt@xxxxxxxxxxxxxxxx>; Victory Over Want
<VOW@xxxxxxxxxx>
Sent: Friday, January 25, 2002 3:03 PM
Subject: What if and Why of Zero Taxation


>         Berglund, Hummel and Winslow almost reached
>         the "why" of this subject on the 'Korean War two
>         currency' thread.
>
>
>         -- If no taxes were collected than government
>             spending would either keep adding new money
>             to the economy or government would have to
>             borrow old money from firms and individuals
>             to match its spending the way taxes can. --
>
>                 Paraphrase of Per Berglund
>
>        --  Zero tax revenues would require that the
>             Treasury finance its spending by borrowing
>             from the public or from the central bank. --
>
>                 Paraphrase of William Hummel
>
>         The above mention of "what if" does not make
>         explicit another form of borrowing that would
>         allow the Treasury to spend budgeted money
>         without balancing it to budgeted tax revenues.
>
>         Such form of borrowing could be public savings
>         deposited with the Treasury.
>
>         Now to the "Why":  IF instead of paying taxes,
>         taxpayers only saved the same amounts, the
>         taxpayers would feel comfortable. Saving in
>         lieu of taxes would be seen as protecting the
>         value of money -- not taking the shirt off a
>         taxpayer's back.
>
>         When the time came for taxpayers to spend
>         some of these savings, the economy would
>         have to have grown in the output of things to
>         buy sufficiently for such spending to have
>         no effect on price.
>
>         This appraoch to zero taxation highlights the
>         main purpose of taxes as a tool to prevent
>         hyperinflation. Savings deposited with the
>         treasury do the same thing.
>
>         If we would avoid deflation and recession,
>         we should also avoid taxes.
>
>         If we would avoid high inflation and hyper-
>         inflation, the use of such special savings in
>         place of taxes will have to be well managed--
>         there may be times when spending of such
>         savings would have to be temporarily
>         controlled.