Re: Krugman on the Deflation quagmire

["Barry Brooks" <barrybrooks@xxxxxxxxxxxxx>]

Concerning taxing those "least likely to spend."

WARREN WROTE:
> ...WHY
> TAX SOMEONE IF IT WON'T REDUCE HIS SPENDING?

One reason why is to put his surplus income back into the consumption
economy and take it out of the investment economy.  Maybe this could be seen
as reducing his spending if bidding up the price of existing assets (usually
confused with investing) is counted as spending.  Such an investment in
existing assets is not spending since it doesn't increase consumption, but
it's good to reduce it because it's the basic cause of demand deficiency.

>THE
> VERY POINT OF TAXATION IS TO CREATE SELLERS OF REAL
> GOODS AND SERVICES, ETC.

Do you think that the point of taxation is to reduce spending or is it to
create sellers?  If taxes are used for other purposes, to stimulate in the
case of surplus income, that means that the point is other than the creation
of sellers.

Taxing surplus income creates buyers for what the sellers produced in the
past which created the surplus income which we are taxing.

Barry