Re: Krugman on the Deflation quagmire; reply to Warren's post

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

Niggle, Christopher wrote:

> Warren: I agree with the Lerner-Keynes-chartalist views on fiscal policy to
> a certain extent: one very important consideration in designing a tax system
> should be its effect on aggregate demand.  But tax systems also influence
> the post-tax income distribution, and there is much historical evidence (and
> common sense argument and ethical considerations as well) in support of the
> proposition that too much income inequality is bad for society.  Hence,
> reducing the progressivity of our tax structure with the kind of tax changes
> implemented under the Bush regime is probably a bad thing in spite of the
> mild stimulus it might effect with respect to aggregated demand.  And
> reductions in tax revenue support the desire of right wing small government
> nuts to reduce social services and investment in public capital.

Why not address the most significant attribute of taxation. That is, the
effect a specific tax has on the distribution of fixed and variable
costs of production.

Transfer those taxes as are now imposed [i.e. -- transaction taxes of
one sort or another] that resolve to variable costs of production and
replace them with a progressive tax on capital concentration [i.e. -- a
"monopoly tax"] that resolves to a fixed cost of production and
magically the marginal cost of production is reduced and companies
reduce prices to cause greater consumption. Disparity in income
distribution would also be reduced but that is only an incidental effect.

But, alas, that would be too logical for economists to grasp.

--
			-- jbod

		Tax Privilege, Not People
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