Reg Whelan's Information

More Tax?

It looks to me like Local Governments are suffering and this is what is evidenced in Mark'Call's Blog about a Blog Tax. The City of Philadelphia appears to be grasping at straws, to compensate for business failures, and the Federal Government probably not being in a position to increase payments to support local Government. There are probably other sources of income like council rates that people are struggling to pay or even unable to pay in the current economic climate.

What happens in an economy when taxation is increased?

Anybody Want to take a guess? If you guessed that prices go up to compensate for the extra taxes business have to pay out, you would be on target. So what else happens. Businesses also have to revise their employment levels because with the increase in prices their sales begin to fall. The unemployment % of population increases. This increases the drain on public and government funding.

Hey you don't suppose that this has anything to do with the rate of inflation. Of course as a direct result of increased taxation there is an increase in the rate of inflation. Governments have the role of trying to keep inflation at at a reasonable level. But that aspect of raising taxation is for another article probably by someone else.

What happens in an economy when taxation is decreased?

It is not hard to immagine some of the direct results of reducing taxation.

Yes! The most evident result is that Governments Federal and Local will have reduced funding levels to work with. Beaurecrats everywhere will be crying poor and wanting to increase taxation. How will this effect wage earners who are mostly the people effected by taxation increases. They should start to jump up and down for glee. Instead of struggling to get increased wages to meet increased cost of living they will now find that their wages are going to go further. The immediate result will be that they have more money to spend in the community. The increased spending will increase profitability for businesses and they in turn will want to employ more people to increase their share of the increased spending.

This increase in employment will translate into more people being able to meet their commitment to government both Federal and local. Local Governments won't need to dream up new rediculous taxes like the website/blog tax we started with. They will be able to commence more projects and generate their own employment. That sounds interesting. Because more and more people are gaining employment Government is now getting less money from each person employed but more money because there are more wage earners to tax. Overall because the % of unemployed reduces along with the drain on government coffers, Government now has more money to spend which in turn will generate more employment in government.

Has the time come to reduce Taxation levels?

What do you think the answer should be?

Has the time come to really consider this option and reduce the Taxation levels? Ok! Ok! This all sounds unreleastic and unbelievable but I believe that an experiment was conducted in one of the smaller countries with runaway inflation and high % of unemployment.

The result of the experiment?

The country now has inflation under control. It has full employment and improved Government services for the community. Unfortunately I cannot claim ownership of this reduced taxation concept but I read about this experiment in an article published by Reader's Digest over 20 years ago. I can't remember the name of the Country involved or the year the article was published.

Hope this gives some of you information that inspires you to stand up and fight against increased taxes of all sorts.

As always

Best Wishes,

Reg Whelan