Re: Krugman on the Deflation quagmire

[David Gleicher <104201.2301@xxxxxxxxxxxxxx>]

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>THIS IS ABSOLUTELY TRUE, BUT BEGS THE QUESTION, WHY
TAX SOMEONE IF IT WON'T REDUCE HIS SPENDING?  THE
VERY POINT OF TAXATION IS TO CREATE SELLERS OF REAL
GOODS AND SERVICES, ETC. SO THE AXE SWINGS BOTH WAYS.
TAXING SOMEONE WHO WASN'T GOING TO SPEND THE FUNDS
DOES NOTHING FOR GOVERNMENT OR THE ECONOMY THE SAME AS
CUTTING TAXES FOR SOMEONE WHO WON'T INCREASE SPENDING
DOES THE SAME NOTHING.

WARREN
<

I don't get this.  The flip side of why cut someone's tax if they're not
going to increase spending (effective demand) is why not(!) increase the
tax if its not going to decrease spending.  Both in terms of the
individual's immediate welfare (which is not reduced) and effective demand
(which is increased, assuming the tax is itself spent) this would seem a
win-win Keynesian employment policy.

DG