I want to answer the following question, What will a 1 percent reduction in government spending equate to in retained income for the various tax brackets?
Would a safe back-of-the-envelope answer be 1 percent? A 1 % reduction in government spending equates to a 1% increase in retained wealth (given that the decrease in gov spending is proportional across all sectors)?
Jeremiah
When taxes are lower, the private sector has more resources.
Government is a negative sum game.
It's a nonlinear relationship.
If tax rates decreases by 1%, then the size of the private sector may increase by more than 1%. With more resources, the free market doesn't just invest in consumables. Some of that 1% is invested in capital goods, leading to a bigger economy.
You're still short of the correct answer, which is "All taxation is theft! Government is a massive criminal conspiracy!"
I have my own blog at FSK's Guide to Reality. Let me know if you like it.
Undoubtedly you are correct. Yet, my question is not given a rate of time (as I'm sure the economy will grow at a faster rate once wealth is in the private sector). I would like to know how a one percent decrease in government spending would translate into a wealth increase per average household.
What I trying to do (as lazily as possible) is model how to overcome the Buchananite system of special interest-the asymmetry of benefits by injecting a system of lottery i.e. probability for decreasing government spending.
My notion is such, if you can inject a system of lottery for voting increases or decreases in government than special interest groups have no reason of fighting for more spending because they would not be for sure if the spending would go to them.
**I'm not short of the correct answer, just approaching the problem differently--I too want NO government**
Jeremiah Dyke:by injecting a system of lottery
pardon?
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
For example, a probability by way of lottery. Whereas those who vote for more government spending could not vote for a specific division of government spending, but could only vote for increased They may chose to vote for additional funding, but there would be a lottery between them and the other bureaus for the same amount of increase. The incentives would thus change. Teachers would be voting for higher taxes (directly affecting them) on the notion of a probability that their bureau will be the one chosen to receive the funding
Reforming the taxing/voting system is *NOT* going to happen. The bad guys love the current system, which provides voters with no choice.
fsk:Reforming the taxing/voting system is *NOT* going to happen. The bad guys love the current system, which provides voters with no choice.
Does the praxeological reality contradict anarcho-capitalism?
earthmoving
It's not obvious that most people don't support the current system as-is.
Most have never even thought about it. They accept what they learn in State brainwashing centers (schools) as true.
Most people assume that if alternatives existed, then certainly the mainstream media would report on them.
I've never heard "Taxation is theft!" seriously discussed on a mainstream media outlet.
I doubt you could say that most people consciously accept the current system. They've never considered the possibility of alternatives.
Jeremiah Dyke:I would like to know how a one percent decrease in government spending would translate into a wealth increase per average household.
It depends on the amount of dead-weight loss the society has been suffering due to the tax(that has been funding government spending).
If a 1% government spending cut means taxes are gonna be $2 instead of $6 on every $100, any two people in the market ready to trade within the range of reduction will make a mutually beneficial trade. For example, an ice cream seller who could sell ice-cream(some particular quantity) at $96 will now be ready to cut prices to $92, and customers who didn't find it worth to have ice creams at $96 may find it worth at $92. So correspondingly, these additional transactions create wealth.
Speaking in mainstream language, it would depend on the price elasticities of demand and supply. But you really can't quantify it, although many economists try to do it. The market is too dynamic for collected data to be relevant for considerable time. Moreover, it's useless to try and study it because economists can't do a better job than the market.
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