Don’t you just love election year politics? Funny thing about our two political parties in the upcoming Presidential election: one apparently doesn’t want it, and one simply doesn’t get it. Some choice, huh.
One solution you keep hearing is to cut spending. That’s a novel idea, but before you go closing down military bases and halt building bridges we all must realize that every dollar spent passes through many different hands and can create more economic activity than the initial dollar spent. Even entitlement spending, and unemployment. We have to consider the “multiplier effect.” Here is an example from the braintrusts of Wikipedia:
For example: a company spends $1 million to build a factory. The money does not disappear, but rather becomes wages to builders, revenue to suppliers etc. The builders will have higher disposable income as a result, consumption rises as well, and hence aggregate demand will also rise. Suppose further that recipients of the new spending by the builder in turn spend their new income, this will raise consumption and demand further, and so on.
The increase in the gross domestic product is the sum of the increases in net income of everyone affected. If the builder receives $1 million and pays out $800,000 to sub contractors, he has a net income of $200,000 and a corresponding increase in disposable income (the amount remaining after taxes).
This process proceeds down the line through subcontractors and their employees, each experiencing an increase in disposable income to the degree the new work they perform does not displace other work they are already performing. Each participant who experiences an increase in disposable income then spends some portion of it on final (consumer) goods, according to his or her marginal propensity to consume, which causes the cycle to repeat an arbitrary number of times, limited only by the spare capacity available.
Another example: when tourists visit somewhere they need to buy the plane ticket, catch a taxi from the airport to the hotel, book in at the hotel, eat at the restaurant and go to the movies or tourist destination. The taxi driver needs petrol (gasoline) for his cab, the hotel needs to hire the staff, the restaurant needs attendants and chefs, and the movies and tourist destinations need staff and cleaners.
SOLUTION TO TRY: first cut down on fraudulent spending.
Then we all hear TAX THE RICH crying from the streets. It was heard in the latest “State of the Union” address. I heard it in the barber shop today.
Yep, it is “us” against the “fat cats” now.
While in the barber shop, an older man was complaining about no “cash-paying” jobs being available any more. He was on Social Security and could only work 6 months a year, or pay half of his extra earnings back to the government. Rather than pay the tax he didn’t want to pay, he simply quit working. History has proven that the rich think the same way. They will not pay a tax that they do not want to pay either.
Remember the “luxury tax” of 1990? Come on, you remember… the tax that was supposed to stick it to the “fat cats” on their private jets and mega-yachts? Sound familiar? (History repeating itself always does!)
For those that really don’t remember, those “fat cats” didn’t want to pay the tax, so they quit buying new planes. CLICK HERE
The “fat cats” decided they didn’t really need new yachts either. CLICK HERE
One fact that everyone needs to face, Democrat and Republican, is that many rich people create and sustain jobs. I like knowing my employer has more financial resources than I do. I am also glad my employer chooses to risk his money and worth without any guarantees. If we throw more taxes on him, at what point will he throw in the towel? Seriously folks, lets not find out.
However, there are some rich people that cling to every dime – just like a hoarder. Those are the rich that need to be taxed. Play, or pay.
SOLUTION TO TRY: A tax on “uncirculated net worth” or “stagnant money” over a certain percentage threshold of income or net worth. The guys with beards could figure out the appropriate exemption levels. It’s the money HOARDERS that we need to tax, not the job creators and job sustainers. Circulate a portion of your net worth each year, or pay tax as if you did. Imagine the number of new cars to produce. New furniture. New restaurants. The list goes on and on and it all adds up to JOBS.
I’m already sick of Election 2012 and it is only just now getting underway. It is supposed to be the most critical election in our nation’s history. So they say. I thought the last one was too? If it is so important, why aren’t there candidates to take it seriously?
We have a field of Republicans gnawing each other into pieces. Who cares if Newt wanted an open marriage 20+ years ago? After seeing a picture of the “ex,” who could blame him? Again, history has proven that a person with certain moral deficiencies can still govern effectively. Just look at JFK, Bill Clinton, and even Richard Nixon. Considering the field of choices, do the Republicans even “want” to win the election?
And then we have President Obama. The economy is finally showing signs of recovery. While gas prices are at record-highs for January, what does he do? He announces his support for a 25 cent per gallon increase in fuel taxes over the next 5 years. Then more of the same “TAX THE RICH.” Perhaps he really just doesn’t get it … or his advisors failed to tell him that Americans vote their pocketbooks.
SOLUTION TO TRY: Cloning Research. Then we could get Thomas Jefferson back to fix it.