Green New Deal

[nwdiver]

UBI should be non taxable

As should Social Security.

I was watching an interesting Economics Explained video in which it was postulated that the true value of taxation was not to provide revenue for the government (the money printer sorta solves that problem) but to create demand for US currency => maintain the value. US taxes have to be paid in US dollars. It sounds counter-intuitive but it would seem that paying someone $1100 then taxing them $100 would actually be better than paying them $1000 untaxed.

IMHO the two primary features of currency people need to accept is that 1) It's 110% fake 2) It only has value if it's moving.

 

[jerry33]

2) It only has value if it's moving.

Agreed, but except for a few very wealthy people, it's likely to move quicker for those earning less income. Which means it will pass through many more hands than just the government's by the time it lands either in tax revenue or in the hands of the very wealthy.

 

[mspohr]

We could start by just giving everyone food stamps. The program is already set up and if you don't need to check for "eligibility", you wouldn't need any bureaucracy. Having food security would go a long way to improving people's lives. Probably wouldn't even need an act of Congress... just an administrative change.

 

[nwdiver]

Agreed, but except for a few very wealthy people, it's likely to move quicker for those earning less income. Which means it will pass through many more hands than just the government's by the time it lands either in tax revenue or in the hands of the very wealthy.

Yep. That's exactly why $1 in food stamps is worth >2x more to the economy than $1 in tax cuts. That's just math.

 

[S'toon]

Yep. That's exactly why $1 in food stamps is worth >2x more to the economy than $1 in tax cuts. That's just math.

Not only are tax cuts not a fiscal stimulus, it's my position that they're a drag on the economy. Every time any government cuts taxes, they have less revenue. Inevitably the deficit hawks, looking on strangling any progress in society start screaming about the balancing the budget, and governments start cutting services. That means less money circulating in the economy.

 

[mspohr]

The New York Times: Goodbye, U.S.D.A., Hello, Department of Food and Well-Being.
Opinion | Goodbye, U.S.D.A., Hello, Department of Food and Well-Being

With just one cabinet appointment, President-elect Joe Biden could tackle economic inequality, the rural/urban divide, climate change, the growing mistrust of science, systemic racism and even the coronavirus.

That appointment is Secretary of Agriculture.

Two thirds of the U.S.D.A.’s $146 billion annual outlay goes to programs addressing nutrition and food insecurity, not to agriculture (or forestry, also in the department’s domain).

The secretary of agriculture should lead the fight against corporations that have created a toxic food environment and support groups building healthful alternatives. The secretary should champion unity among farmers, rural people and urban advocates for racial and economic justice against the common enemy of consolidation and concentration of wealth. And the secretary should use the department’s vaunted research and extension capacity to support a food system that can rebuild rural economies, regenerate ecological capital, mitigate climate change and provide nourishing food for all.

 

[mspohr]

Biden’s Plan for Seniors Is Not Just a Plan for Seniors Biden’s Plan for Seniors Is Not Just a Plan for Seniors
President-elect Joseph R. Biden Jr. has no shortage of ideas about how to transform caregiving. One striking feature of his team’s plan: It does not address elder care separately from child care, or divide plans to support family caregivers from those for paid caregivers. Rather, it takes on Medicaid benefits for older and disabled adults, preschool for toddlers and better jobs for home care workers, all in one ambitious, $775 billion-over-a-decade package.

 

[nwdiver]

That means less money circulating in the economy.

I like to use an engineering analogy to highlight the absurdity to ideologically driven economics.

Manager: The hot well is running dry. We need to bring another condensate pump online.

Engineer: I would advise against that.

Manager: .... why?

Engineer: Moral Hazard.

Manager: ..... you're fired.

 

[nwdiver]

GND MERCH!!!

 

[eevee-fan]

Yep. That's exactly why $1 in food stamps is worth >2x more to the economy than $1 in tax cuts. That's just math.

Shark Tank's Kevin O'Leary on COVID-19 stimulus: Give American people checks, 'stop funding companies'

 

[nwdiver]

Shark Tank's Kevin O'Leary on COVID-19 stimulus: Give American people checks, 'stop funding companies'

This is my favorite part;

“Why do I want to bail out the shareholders of an airline when really it should go bankrupt?” O’Leary asked. “The middle name of airlines is bankruptcy. They do it well, every seven to 10 years. Let them do it again, to downsize because I don’t need them, the S&P doesn’t need them. We don’t need to fly everywhere anymore. We can do it on a Zoom call. I want to take care of the flight attendants and the people that used to work at those airlines, but that’s just one sector of the economy.”
​

Agreed. We're allowing airlines to operate at the razors edge of profitability and essentially subsidizing airline tickets. A round trip ticket from Seattle to San Diego should be ~$3,000 not $150. Maybe if the pricing was accurate people would behave accordingly.

 

[eevee-fan]

This is my favorite part;

“Why do I want to bail out the shareholders of an airline when really it should go bankrupt?” O’Leary asked. “The middle name of airlines is bankruptcy. They do it well, every seven to 10 years. Let them do it again, to downsize because I don’t need them, the S&P doesn’t need them. We don’t need to fly everywhere anymore. We can do it on a Zoom call. I want to take care of the flight attendants and the people that used to work at those airlines, but that’s just one sector of the economy.”
​

Agreed. We're allowing airlines to operate at the razors edge of profitability and essentially subsidizing airline tickets. A round trip ticket from Seattle to San Diego should be ~$3,000 not $150. Maybe if the pricing was accurate people would behave accordingly.

At $3K, a Tesla with Self Driving will undercut that price and make a fortune!

 

[nwdiver]

At $3K, a Tesla with Self Driving will undercut that price and make a fortune!

And we won't have to keep bailing out the airlines every 10 years.

 

[Big Dog]

Not only are tax cuts not a fiscal stimulus, it's my position that they're a drag on the economy. Every time any government cuts taxes, they have less revenue. Inevitably the deficit hawks, looking on strangling any progress in society start screaming about the balancing the budget, and governments start cutting services. That means less money circulating in the economy.

That's a fail in Macro-economics. (ignore Exports-Imports for the time being)

There is Government spending, there is consumer spending and there is corporate/business spending. All three help grow the economy. Targeted tax cuts (to the lower and middle class) turn into Consumer spending. Sure, it may restrict Government spending, but Consumers can easily make up for it. Ditto tax cuts to businesses, particularly small business, as that also gets recycled back into the economy quickly. Corporate tax cuts also increase R&D spending which adds to the economy. (tax cuts turinng into greater dividends and stock buy backs, not so much)

So the question becomes which of Govt, Consumer or Business spending has a greater multiplier. (Ans: depends on the specific spending. Paying local teachers probably positive; buying bullets, perhaps not.)

 

[mspohr]

That's a fail in Macro-economics. (ignore Exports-Imports for the time being)

There is Government spending, there is consumer spending and there is corporate/business spending. All three help grow the economy. Targeted tax cuts (to the lower and middle class) turn into Consumer spending. Sure, it may restrict Government spending, but Consumers can easily make up for it. Ditto tax cuts to businesses, particularly small business, as that also gets recycled back into the economy quickly. Corporate tax cuts also increase R&D spending which adds to the economy. (tax cuts turinng into greater dividends and stock buy backs, not so much)

So the question becomes which of Govt, Consumer or Business spending has a greater multiplier. (Ans: depends on the specific spending. Paying local teachers probably positive; buying bullets, perhaps not.)

I think that many people here (and elsewhere) have made the case that giving money to poor people has the largest benefit to the economy. Poor people immediately spend the money (usually locally) and this creates a multiplier effect. Corporate tax cuts do little for the economy. Most of that goes to high paid managers and stockholders who just sit on the money since they don't have any pressing need to spend. Government spending is a category but to look at it's effect, you need to see where the money goes. Defense spending goes to rich corporations with only a moderate effect on the economy. Health and education spending goes to middle class people who do stimulate the economy but not as much as just giving money to poor people.

 

[nwdiver]

Most of that goes to high paid managers and stockholders who just sit on the money since they don't have any pressing need to spend.

Yep. If my income increased by $1000/yr my spending might... MIGHT over the long term increase by $100/yr. That's not a multiplier. That's decay. That's why on average a $1 in tax cuts yields ~$0.70 in economic activity IIRC. While $1 in food stamps is ~$1.70.

 

[jerry33]

Yep. If my income increased by $1000/yr my spending might... MIGHT over the long term increase by $100/yr. That's not a multiplier. That's decay. That's why on average a $1 in tax cuts yields ~$0.70 in economic activity IIRC. While $1 in food stamps is ~$1.70.

I guess it depends on what income you started with. For most of my working career an extra $1000 was either spent on resources to further my career or pay down the mortgage (interest wasn't always 1-2%, often it was way over 6%--for those that don't know, paying your mortgage early, especially in the beginning years gives a return that's double the mortgage rate).

 

[nwdiver]

I guess it depends on what income you started with.

Well... yeah... if you're on food stamps and your income increases $1000/yr your spending is probably going to increase by $1000/yr. That decreases with an asymptotic approach to $0 as income increases.

 

[SageBrush]

I'm not a fan of taxes due to corruption and inefficiency. Without massive taxes, trump could not have existed.
And yet, I accept them until something better comes along because society *needs* education and basic research, and thus far I've yet to see an alternative successful funding mechanism. I sure would not mind paring down a lot the baggage though, if only to weaken the concentrated powers that political executives now wield.

 

[Big Dog]

I think that many people here (and elsewhere) have made the case that giving money to poor people has the largest benefit to the economy. Poor people immediately spend the money (usually locally) and this creates a multiplier effect. Corporate tax cuts do little for the economy. Most of that goes to high paid managers and stockholders who just sit on the money since they don't have any pressing need to spend. Government spending is a category but to look at it's effect, you need to see where the money goes. Defense spending goes to rich corporations with only a moderate effect on the economy. Health and education spending goes to middle class people who do stimulate the economy but not as much as just giving money to poor people.

I don't disagree with any of what you posted, but that is NOT what S'toon said. In fact, s/he is wrong by saying: 'tax cuts are a drag on the economy'. On the contrary, following your point, a tax cut to poor folks will get spent immediately; heck, a tax cut to the lower half of the population (~$55k/yr) will mostly get spent quickly, creating even a larger multiplier effect.

As an aside, want to get money in people's hands fast? Just zero out the employee portion of the SS payroll tax, aka a 'tax cut'. (Yeah, that's a hit to the SS Trust fund, but if you want a multiplier effect, temporarily eliminating the SS payroll tax will get money multiplying...)

Thus not all tax cuts are bad, or a drag on the economy.