Taxing the wealthy, taxing the corporations, improves the economy. Taxing regular workers harms the economy. We need to stop acting like the opposite is true.
Taxing and spending (fiscal policy) have direct and immediate results in the economy that interest rates (monetary policy) simply do not have. However, broad statements and assumptions seldom hold true where they are concerned. The devil is always in the details.
I, in spite of being very progressive, do not agree with punitive taxation of corporations and would rather see the taxes collected after the profits are distributed to shareholders. This, of course, should accompany tighter regulation that bans most stock buy-backs and limits corporate cash holding. Remember, the goal of taxation is never to “pay for” any of the spending done by the federal government, but simply to remove fiscal assets in the private sector that create inflation or extreme inequity. The US dollar is completely self-funding in endless quantity, in spite of the rhetoric and uninformed opinion of the current clown car of our government/politicians.
Corporate taxation on profits assumes every investor has the same level of shareholdings, which is hardly true. Many may be small investors or simply deposit account holders whose accounts are tied to shares to offer higher returns. Any progressive tax plan will always apply the tax downstream from the source of profits to weed out many who could serve us much better if we didn’t needlessly extract from their smaller investment. Less tax of business almost always offers lower prices as well as long as some competitive environment is available in their industry.
The first thing we should do is disconnect taxation/borrowing/revenue from the ability of Congress to spend which is not enhanced in any measure by removing past productivity from the economy simply to reduce a mostly irrelevant tracking number at Treasury called “debt”. Neither taxation nor borrowing is able to be recycled after they remove previously created money to enable that money to be spent. It is simply gone into the ether from which it was created.
Money moves upward, so it should be primarily extracted from wealth when necessary, but their money also has the least impact on inflation, so expectations should not be too high of doing so to control anything other than their level of wealth. The “threat” of high taxation if certain social goals aren’t met is normally much more effective than “actual” collections. As satisfying as it may be to reduce the privilege of the smug ruling class, it is much better if it can be redirected to the public good. This means always providing a well defined and productive “out” for taxation.
