Quote:
Originally Posted by Kiroy  Tax cuts for all if you ask me. Tax cuts for poor = more spending, tax cuts for rich = more investing. |
Two issues with that:
1. The government will have much less revenue, which either means less spending (cutting governmental jobs and expenses through contracts with private companies), which is going to have repercussions now, or more debt, which, like for individuals, is always an option but rarely a good one.
2. Cutting taxes across the spectrum is like printing more money - an expansive monetary policy, which is going to raise inflation and thus while everyone would have more money, they'd effectively have the same or less as things get more expensive. Now if the tax cut isn't permanent, that'll catch up with people: things will be more expensive effectively, leading to a decrease in consumption and it may even lead to a recession. The only way to prevent that is to keep the expansive policy going with keeping taxes the same or even reducing them further, a vicious cycle.
Not to mention anyone who owns US debt will be very pissed when the worth of the debt declines and may cause people to lose faith in the dollar. With the Euro, there's now a serious alternative.
Fiscal policy is a VERY difficult and complex issue and needs to be entirely disconnected from politics. imo in a perfect world, politicians would have no say when it comes to taxes - it's bound to be abused to gain votes or appease supporters, when really its only purpose should be maximum prosperity and stability.
