Economics for Occupiers Part 9: Taxes and Reaganomics

In this discussion, we're going to examine how tax policy influences the economy, revisit Reaganomics and shed a little sanity on the liberal conventional wisdom about trickle-down economics.

Since America feels that it would be a conflict of interest for the government to compete with the private sector in most areas, the government's source of revenue is taxes. There are also government fees, but those are generally designed to pay for services rendered and don’t typically yield a surplus. Punitive fines are  another source of income, but that is minor and unreliable for budgeting purposes.

Taxation in a free market is the agreed upon demand that society places on the productivity of the individual, to be used for the common good. The ultimate goal of government tax policy is to raise the maximum amount of revenue without overly disrupting commerce and the electorate. A simple economic model postulates a fixed gross production, and tax revenues are merely a percentage of that production. If we boundary check this model, a zero percent tax rate yields no revenue for the government, while a 100% tax rate disrupts all commerce and leaves nothing for the population to consume. The solution in this model is to hold as high a tax rate as possible and still leave some for the plebes to survive on.

You cannot redistribute wealth. History shows that you can only redistribute poverty.

Read more about this in chapter 12 of Economic for Occupiers, now available on Amazon.com.