Monday, October 22, 2012

taxes and politics

a friend posted this link on facebook, along with a quote to the effect of, "raising taxes to pay for investments in the middle class creates jobs". i resisted posting a response there because i don't like to argue about these things and would rather keep my opinions to myself, and because (relatedly) i am afraid to affect others' opinions of me in ways that i don't have close control over. so i thought i'd post a response here, where no one can read it:


while i agree generally with sentiment that says the rich should be taxed relatively more, the idea that this is then turned around by the federal government into "investment in the middle class" is not obvious to me. i think that very little of taxation, at least in a developed country like the US, translates directly into economic growth. in fact i think it tends to be the opposite, and i agree more with the idea that raising taxes tends to suppress growth.

a large portion of government spending put in place by the democratic party (which is presumably the favorable political dimension for the approving audience of this talk) is in the form of political favors to constituencies that have an insignificant impact on the economy (poor, elderly); institution of new bureaucracies which have to be funded at the same time that their mandate is usually to impose some form of *restriction* on certain types of economic activity; increased funding of dysfunctional programs without improving function ("education"); and, you can be sure that the more the US government collects in taxes, the more it will spend on the military, or on foreign aid, etc.

interesting case in point relevant to our livelihoods: significant government spending goes into biomedical research, which winds up making people live longer at the same time that it makes all forms of healthcare more expensive (MRI for everybody! one-of-a-kind cancer drug for my grampa! YOU CAN LIVE FOREVER NOW). i guess this creates jobs in the hospital/rest home industries.

*not that any of these things are wrong per se*, but it's not clear how any of this works as investment in the consumer class that generates net jobs. i think the government of a developed country actually has very little capacity to "create jobs", except in managing trade policy and maintaining transportation infrastructure. i.e. i think this guy's argument is pretty arguable.

No comments:

Post a Comment