Tuesday, August 26, 2003
Tax and Invest
People generally assume that it
matters (impacts economics and productivity) how much a government
taxes its populace, but my analysis says that matters very little in the
long term compared to how the government spends its money.
What would happen if the government raised taxes and cut spending
enough to be running with a surplus (hey, it's happened before!) and
invested all that surplus in its own stock market? Essentially they
would be forcing people to consume a little less and invest a little
more, which is the fuel of exponential growth.
Is there any reason that eventually such a government couldn't eliminate
taxes entirely and run on dividends? (A followup question being: would
that be any different in net effect than running on taxes?)
Simon Funk /