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

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

James R. Olson, jr. wrote:
> Can you explain this a little more?  I can't quite work out what you mean.
>
> What do you mean by "capital concentration," and how would you measure it?
Add together corporate equity [i.e. --  the price of common stock times shares
outstanding] and the outstanding debt [i.e. -- the sum of all the bank loans,
bonds, preferred stock, etc.] and the total is the market value of a corporation.
The larger that value the greater the concentration of capital.
> How does taxing it resolve to a fixed cost of production?
The tax is progressively proportional to the value of the corporation and
independent from the rate of production. It must be paid regardless of how
much is produced and therefore unit [i.e. -- marginal] cost of production
can be reduced by producing more which implies that prices will be lowered
to increase demand.

Unit cost is also decreased by removing the present taxes that can be replaced
with revenue raised by the monopoly tax. These present taxes are based on
the rate of production [i.e. sales and value added taxes] and otherwise increase
the marginal cost of production by increasing the cost of labor such as with
personal income taxes. [i.e. -- Wages are not negotiated in a vacuum, they
do take into consideration the cost to labor to get to work and any other
obligations incurred by working such as personal income taxes.] removing
these variable cost of production expenses further reduces the unit/marginal
cost of production.
> At 07:25 PM 5/30/03 -0700, John O'Donnell wrote:
> > 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.
> >   
> xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
>
>   Warning!  This communication monitored by the Federal Office of Total
>   Information   Awareness.  All statements deemed disloyal or dangerous
>   will be logged for appropriate action.
>
> xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

--
			-- jbod

		Tax Privilege, Not People
___________________________________________________
Come visit and see a new economic perspective --
       http://www.geocities.com/CapitolHill/1067
           Comments/arguments welcome.
.