Challenge this claim: We should tax in a proportion to the level of savings. This is a similar but different notion of a progressive tax (since those more affluent tend to save more of their income). Cuts should be given for income growth (since these agents can be said to be efficient or in demand), and the general tax level should increase as the aggregate saves more (otherwise effective demand will tend to decrease if the leakage of savings is not counteracted by government spending). I characterize it by the following equation: (Net income*flow of nominal savings*aggregate average propensity to save)/(expenditures*nominal taxes*growth rate). Or: (Ni*S*A)/(E*T*Gr) All variables are flow variables and measured in nominal terms besides A and Gr; where Ni= Net Income, S=Savings, A=Average propensity to save on the aggregate level, E= Expenditures (consumption and investment), T=Taxes, Gr=Growth Rate. The product should equal the equilibrium tax rate for each individual in particular. Try it out yourself, those who hoard will be taxed more; those who increase their employment will be taxed less. My goal is income equality; if you believe this model will work in its enforcement, please share why and what other factors should be considered.
Posted on: Thu, 01 Jan 2015 03:22:04 +0000
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