I find that import taxes really put things back a lot. getting goods into the country relies on import taxes, and, this will limit the amount of goods that get into the country to get taxed more for sales tax, yes? this means the state stands to make more in taxes through having an equal amount of money, or, even more, from the private sector, to get the goods into the country, and then tax them more once they are there. Let me see if i can put this into a formula? [x goods - y import taxes] * [z sales tax]. this means that if the import taxes are set at 10 percent, and, the sales tax is set at 12 percent, obviously you make more from an equal amount to be sold, yes?
Of course, if we were to reverse this formula for the imports to incorporate exports, we could say that the less tax we put on manufacturing, the more gets manufactured and sold. if you were to tax raw materials, for example, 10 percent, and tax sales by 12 percent, nearly the same formula would apply; [x raw materials - y tax for raw materials] * [z sales tax]. So, the less they pay for raw materials, the more gets produced, the more there is to tax at a higher rate, yes? the advantage of this is that the customer gets taxed for imports, which can be set low too, to encourage the production of goods locally, boosting employment, boosting income tax levels, which boosts the rate of pay for the people, which boosts the rate of expenditure to be taxed on from the citizen to the state.
If it comes down to taxation, the only way the state gets money is through taxes. that said, there is incentive to sell as a hawker if the person wants to escape taxation, but then it goes to a bank, yes? at this level, little can be done to garner a few hundred thousand rand a year through hawking taxes, of course, as it will take too long and get too little. So, we need to tax the private sector and the public sector, but, taxing the public sector really just increases stresses on the public sector's manpower, of course. if the state was to stop income tax on public sector staff, they would lose some money, but, comparing this to sales tax for goods where the citizen pays more taxes in total for the goods, while having a choice where to spend it, would suite them nicely, and, they would complain less. higher costs of goods - less income tax, of course. Let's see where else we could make changes for the taxation of of the country and make more out? there must be something more? if we were to observe the rate of taxes, there would be 100% income tax rates with sales tax resulting in less than 100% of what is left after income tax. this means that spending 100% of a 100% to be taxed on, and, somehow the same comes through, yes? let me put this into two formulas, the first is [1] income tax followed by sales tax, the second is [2] no income tax followed by sales tax, yes? [1] [(x) income - (a) income tax] - [(b) purchases / (d) sales tax]. [2] (x) income - [(a) purchases / (d) sales tax]. As we can see, there is more to be taxed on in two, and, that will result in more money for everyone. the state will see the full remuneration or money coming back to them and more economic growth too.
Previously i found that reducing taxes to an ideal rate of one thirty percent for five tax points or so, resulting in a tax rate of six percent at each point, leading to sixty percent every month was 'ideal.' this is a lot to make off the private sector at each point, and leaves the citizen hardly feeling the pinch. of course, if the tax rates were any lower, there would hardly be any taxes incoming, and, if they were higher they would bring in less; i will show you what i mean now. If the tax rate is ten percent, and the citizen spends all their [2000] money, the state makes [200]. if the tax rate is five percent and the citizen spends all their [2000] then the state makes [100], yes? but, lets split it up into five points? 1.a) [2000] - [400 * 5] in expenditure leaves ten percent taxes being [40 * 5] = [1800] spent into the private sector and [200] spent in taxes, yes? 2.b) [2000] - [420 * 5] in expenditure leaves five percent taxes being [20 * 5] = [1900] spent into the private sector and [100] spent in taxes, yes? ~ By now you might be wandering where this is going? all i have done so far is show how the private sector benefits from this lower tax rate, yes? but, the private sector gets taxed on things too, and, now they have more money to spend on things they spend sales tax for, or retail tax and all that stuff, okay? thing is, they spend all their money on goods coming in, new goods, and so forth. 1.b) [1800 / 10%] * [5 tax points] = 900 going to the state at this point at various tax points. 2.b) [1900 / 5%] * [5 tax points] = 1900 or so going to the state at this point, though sales tax, retail tax and other taxes at various points. As you can see the rate of renumeration is higher with less taxes, as, the business gets more from the customers not having to pay tax, allowing them to buy more goods for sale, and them picking up the bill for the goods and creating more tax monies.
I think it is about gathering resources for the state. this started a long time ago with kings collecting money from the peasants for the kingdom to allow them freedoms or something.
I'm going to disagree, but I hope you take my comments only as constructive. The problem with modern economics is that your understanding, based on your reply, is outmoded however the overwhelming majority of the population shares your view. The claims I make will require that you unlearn some of the things that you (and everyone else) takes for granted to such an extent that when people question my ideas, I am generally derided as ignorant of "reality". Having said that, I hope that you (and others) will pursue a discussion with that in mind and give me some space to make my argument. Thank you in advance. So, you believe that in economies like US, Canada, UK, Australia and Japan (sovereign fiat economies that can create their own currency where the governments do not fix the value of the currency they create to anything other than it's own dollar at "par") , in order for the state to have money, they must impose a tax upon citizens? Note that the governments under the European Economic Union are conspicuously absent from my list as they fortified their monetary sovereignty. If you come to understand what I'm saying, the Euro's imminent demise (under rules in place today) will become clear.
I have been thinking of how prices will rise if everyone is earning more, and, this will impoverish everyone from a certain point down. so, the more you earn the more stuff costs, which leads to no benefit for anyone, as the people selling goods will also have to buy the goods of others, of course. So, what is the solution to this problem? we cannot have a ten percent wage increase each year where prices also rise by ten percent each year, can we? when the price of oil goes up the cost of transporting the goods goes up, so the price of the goods goes up too. it would be unfair to make the transporting sector bear the weight of the oil by themselves, but, maybe there is an alternative? If the oil price goes up, the transport people will be able to transport less for the same amount of money, which means the supply goes down! this would mean that the price of goods will go up, as making the same amount of sales figures will be on the sales people, so that is no good. if the people that own the oil and sell it recognized that the price of goods around them will also go up, maybe they would keep the price of oil the same, for the sake of everyone else, but, then the prices will still go up due to increased supply of financing. This means the state needs to get involved. if people really want to see change, they should freeze the prices of goods, which means the retail sector will take a knock, but, not the employees of the retailer, as, they get to buy these goods too. this will encourage owners to branch out to make more outlets for more income, which will mean that supply will go up and prices will come down. of course this means that there is less incentive to sell goods, which means there needs to be less taxation on the goods, which comes from the state - maybe they could lower taxes by a few points for the retailers, as they are the only ones hit by this? This is my only solution i can see to this problem. there seems to be no other way to improve the lifestyles and standard of living for everyone other than to bring the law into it. this will only take a few hours to be drawn up, and then the country will start improve economically.
No, it's not true, but it's understandable that most people believe it does, given the apparent, though false, circular nature of our economy. It's common to believe that the model looks like this: When it fact, it's more like this: Notice in the second pic that spending is first? Logically, how could it be any other way? How could the government tax first? Remember the government only takes the dollars (or other forms of currency) it creates in taxes as payment of taxes, thus your tax burden can only be settled in dollars. If that's true, how can a government tax to pay for spending if spending is the only way to move dollars into the hands of those that need to pay taxes? It's easy to conflate the system that existed before, dollars backed by gold and the system that exists today, fiat. Go back to 1940's during WWII. Obviously, the government did not have enough gold to create the dollars necessary to buy what it needed to fund the war but given the extremely low rate of unemployment, there were lots of dollars moving into the hands of people in the private sector. This was creating massive inflation pressure for 2 reasons. Labor was scarce (evidence by the fact there were so many women working at the time, relatively speaking), and an increasing number of businesses (mostly manufacturing) were diverting their production to create war materials. So people had more money and there was less to buy, a perfect storm for inflation. Now we generally believe that wartime efforts to encourage people to buy bonds was about paying for the war. But how could that be so? The government could create all the money it needed just by "running the printing press". No, selling bonds weren't about funding, it was about inflation control. Selling bonds removed excess dollars by selling people savings accounts (increasing what could be bought). This decreased the number of dollars in circulation and helped keep inflation under control. It worked because the government instilled a sense of patriotism by telling people they needed the money to fight the evil Axis powers!!! It was much more effective and intuitive idea (to the public) than telling people to buy bonds to prevent the money they were holding from decreasing in value. Like I said...You need to be capable of unlearning in order to see what I'm trying to tell you clearly. Ok, so let me ask again. If a government on a fiat standard were to start today, how could it pay for spending if it hasn't put dollars into circulation yet? I mean, remember that taxes can only be paid will dollars. If you look at the linear diagram above, you see that the difference between +money and -money is the deficit what we call base money. If the government were to run a balanced budget, there would be no money. base money is the money the government creates. Banks don't lend base money. Base money is the reserves that banks use to create credit. No base money, no credit. Now I'm not certain how familiar you are with bank balance sheets, but in order to really grasp what I'm talking about, you have to understand that a bank's liabilities and assets (not including interest) always net to zero. Hope that helps and spurs more conversation.
You have it backward, spending comes before inflation, but aren't you assuming that spending will cause inflation? I mean, if inflation is a rise in the general price level and prices, driven by spending, increase when there is a lack of labor and raw materials, do you believe that as a nation we cannot meet increased demand for goods and services? Won't cmpanies, looking to increase their market share attempt to fill the shortfall either by increasing output, or other new companies starting up to meet the increase or some combination thereof? Perhaps government programs that assist in moving people from industries that are becoming outmoded (like coal for instance) and teaching them new skills to meet whatever the nation's spending is causing a shortage of? I really hope this is helpful. I'm not trying to be a "know it all", it's just that I've spent many, many years learning this stuff.... First, it's well known that a 10% increase in wages will not equate to a 10% increase in price, but just how much it will causes the price to increase depends on the size of your business relative to labor costs. I worked as a manager of a shoe store in college. I can tell you the store paid out $100k in salaries and did a gross profit of about $500k. A 10% increase in wages, $110k, does not require a 10% increase in sales $550k, make sense? To cover the increase the store would need to make $510k which is a 2% increase in prices, not 10%. Now, these are rough numbers I hope illustrate a point. In farming, it takes relatively few people to farm 100's of acres, but other labor intensive business can be affected more. These are the kinds of businesses that are targeted for automation. If you think about it, that's exactly what happened to farming. 90% of the nation was agrarian at the turn of the 19th century. It was targeted for automation and now something like 2% of the nation works creating food. Going back to the quote above.... With that, you've actually identified two different and distinct drivers of inflation. Inflation is driven by increases and demand which cause decreases in inventories, called demand-pull inflation Inflation caused by the loss of a key resource could be a natural resource like wood, water, oil, (energy), and land (in some specific instances. called cost-push inflation Let's look at the period from 2006 till today. The supply of oil began to decline after 2006, by a combination of increases in demand (driven by nations like China and India) and a decrease in production. This caused prices to rise. However, the price increase created opportunity and higher prices lowered the "barriers to entry" in that oil extraction in North America has historically been too expensive, but with rising costs increased profits and lowered the barrier to entry which helped pay for the most expensive part of establishing an industry...And that is, establishing the industry. It took almost 10 years, but all the money spent increasing North American energy output has caused supply to increase and prices to fall. But now that prices are as low if not lower than the past (accounting for inflation) the industries that were created are still in business because the hardest part of producing more energy in North America was getting started, something higher prices helped make possible. So inflation isn't all bad, it can have a stimulating effect. The hardest part is that adjusting your workforce for every changing needs is difficult, this is where the government can play a positive role. Case in point. If there were a shortage of transport, don't you think companies will see the shortage as an opportunity to increase their market share? It's not unusual for an increase in spending to cause a decrease in supply, but it's the demand that drives the increase in spending on buying new trucks and hiring new workers. Freeze prices? One of the problems with expanding are the capital costs. Buying more trucks, purchasing labor and other infrastructure (like computing) to handle more customers. You can't freeze prices, where are companies going to get the money to expand if not from an increase in prices? Try to remember that when this hypothetical trucking company expands it will spend lots of money. Every dollar it spends is earned as an income by other companies and their workers. This is where government spending comes in. If the government can increase spending and business uses that money to increase output, then there are no shortages (or they are short lived) and overall employment goes down and prices either stay the same or decline (in real terms). I'd like to answer this last part in some detail, and perhaps we can come back to it, but until we discuss what I've already written, I'm afraid it wouldn't make much sense. Stick with me though and we'll see if I can help you have a better understanding
NOTHING IS FREE!! There is going to be a cost for everything we do. If we force higher wages this is higher costs. If we add tariffs this creates higher prices. If we do something to lower imports our exports will also lower. I respect the business world and I respect the natural equilibrium that exists between costs and prices and profits. Billions of people and businesses each day are trading goods and services and most of the time it works great. I hate it when people and government believe they can arbitrarily force changes to this equilibrium and act as if it's all free. Nothing is free!
With all due respect sir, don't you think your reasoning here is rather circular? "Nothing is free"---Why?---"Because everything has a cost"---Why?---"Because nothing is free!" There's not a lot to learn there. Yes, everything has a cost, but some costs result in better outcomes than others. Sometimes those outcomes outweigh the costs. If a cost results in something of more value than the initial cost, what would you call that? I'm not aware of many arbitrary changes that government attempts to enforce. Yes, there are subjective changes (almost all changes are subjective), but even subjective changes are be based on very real information. Failure comes when decisions are made without information or poorly interpret the information given. As far as "natural equalibrium" that exists in business. There is nothing "natural" about the system. It is from the ground up enterily artifical. "Natrual Rate of unemployment"? No such thing. "Natural rate of interest"...(lol) No such thing and "Natural Minimum Rate that people are paid"...Again, no such thing. The government's job is to enfoce stability on the system, the private industry, in an effort to gain an advantage and seek higher profit, is trying to unbalance the same system.
I think I understand the logic in 'nothing is free' but I'm thinking you and most others don't understand the philosophical statement pertaining to people demanding more that the 'more' is not free! So for example, you think it's more important to put the minimum wage at $15/hour than it is to be concerned about how this effects competition, hiring, job performance demands, and inflation? Using minimum wage as an example, those who function close to the minimum wage will always be in the bottom rungs of the economy no matter if minimum wage is $8/hour or $15/hour or $50/hour. Government can dictate tax policy, FICA withholding policy, minimum wage, insurance, OT, etc. etc. etc. Well...regarding natural equilibrium of trading and the economy...it takes place 24/7 around the world!
Sure I get it, however, I'd like to keep this cordial, so I understand why you might think that and hopefully, I can make my position clearer as we discuss. I think what you mean when you say "nothing is free", is that with every decision comes consequences, many are unforeseen and unintended and when decisions are made on ideological grounds rather than evidence-based ideas, the worse the consequences seem to be. I've spent an inordinate amount of time understanding the economy and the one thing I've learned (and this is going to sound incredibly immodest) is how few people understand the system of economics they live in, something I'm sure we may get to. I'm not sure if you meant that literally, but I'll just point out that I think minimum wage is a "sledgehammer" approach to the problem of inequity and wages. Specifically, the problem that there are people at the bottom of the economy that cannot earn enough to support themselves. I think there are better solutions, like a job guarantee, but that is a much longer and detailed post. As far as how it affects competition, hiring, job performance and inflation. I assure you I am well versed in these sorts details. If you'd like to be more specific I'd enjoy a discussion on any of those topics. I think people use the term "natural" in an economic sense is a fallacy. As if there is an invisible hand guiding things and if left it's own devices that it will just work itself out. This is patently false and we've seen examples of this over and over again. There are certain paradoxes at work... What's good for a company individually can be bad for the market overall. For example, paying workers less helps companies save money on wages (the justification being that lower prices will help lower paid workers), but workers are the people that provide the demand for products. If you cut wages, you are cutting demand and that won't stop until everyone is worse off. Giving an individual greater freedom can reduce the freedom of everyone. Let's say there are 15 people on a large boat each with their own room. No one has the right to enter another person's room without permission under any circumstances. A leak forms in one of the rooms, but the person in the room does not give permission for the others to enter to fix it. So the boat sinks and everyone dies? Silly examples? Perhaps, they aren't perfect, but they do get across a point
