Re: What if and Why of Zero Taxation

[larson@xxxxxx]

Quoting Schulte-baeuminghaus <schulte.baeuminghaus@xxxxxxxxx>:

>     It may be that "There is no scientific study" suggesting a
> correlation
> between high interest rates and investment; but, in the practical world,
> it
> may be dangerous for the potential investor and others to assume that
> there
> is not one - except to hang on to your money and collect fat interest
> payments on it.

Even if credit is interest-free, debts won't be assumed by firms unless they
expect to be able to pay principals as demanded. On top of that, big firms have
their own internal funds to finance investments and are more or less
independent of the general interest rate level.

> Perhaps you are saying that there is not a mathematical formula that
> perfectly fits the case and that may be true.

No. I'm referring to empirical evidence, plain and simple. Of course, you need
mathematical formulae to obtain such evidence, but the formula in itself is
nothing but a chain of logical "if-then"'s and can't serve any other purpose
than to clarify a hypothesis. Such logic can prove anything, and it's even
easier with implicit axioms. Spinoza's Principia Ethica allegedly contains 126
such axioms, and a third of that would be sufficient to prove the truth of
absolutely everything.

> If , by that, you mean that a key objective of a "welfare state or
> even
> welfare system" is full employment, then it would be difficult to
> disagree.

No. The objective of the welfare state is gradually increasing, evenly
distributed prosperity. A necessary, but not sufficient, condition for that is
full employment.

> As for taxes, full employment will usually mean that, ceteris paribus,
> taxes
> will be lower.

In Europe and Britain we stand up to our chins in evidence that high taxes
PREVENT full employment. Hence the suggested order of appearance isn't
meaningful.

Born left, taxed right,
/srl

--
Sven R Larson
PhD; Assistant professor of economics
Department of Social Sciences, Bldg. 22.2
Roskilde University
Pb 260
DK-4000 Roskilde
Telephone: (+45) 4674 2910