trc (02/08/83)
The following is an interesting idea (with some flaws, I think) for helping to stimulate the economy and get people back to work. Background arguement: draw a graph of $ vs # of workers. On this, draw a horizontal line to approximate the average cost per worker. Now draw a curve that represents "average net income per additional worker". This curve should be above the average cost line at some point, and then taper off (diminishing returns) til it goes beneath the average cost line. The point of intersection gives the approximate number of employees. Now, the average net income curve is lower than it might be if there were no corporate tax (as suggested by Reagan the other day), and this results in a slightly higher unemployment rate. Unfortunately, there is virtually no chance of a repeal of the tax in the near future. My idea: Corporations would be allowed to reduce their taxes by any amount up to what they pay, if, for each dollar saved, they spent "N" dollars on hiring people. Looking at the graph again, one can think of the tax dollars being used to add a bump to the "average net income" curve right at the cross over point. This bump should be large enough that many companies will take advantage of it and get a small net increase in profits as a result. This gives a leverage factor of "N" over what the government could do if it were to merely spend the tax revenues to pay un-employment checks. Any loss of revenues is made up in increased personal income taxes by workers and stockholders, as well as the decreased un-employment payments. Politically, this should be acceptable to Democrats (gets people working), and Republicans (not a work program, doesnt rely on direct govt action). It would only be an option, so no corporation would be forced to take it. The flaws - an increase in government meddling in private matters, and it is not a long-term solution - only a short term patch. However, it is at least a step in the right direction - the lesser of three evils ( take this new option, or pay your taxes, or we'll take your money by force. ) And if it succeeded really well, perhaps even lesser evils could come into being in the future. Comments? No flames please - this is just an idea, not a challenge. Tom Craver houti!trc
mjb (02/08/83)
Anyone responding to the referenced article should do so to net.politics, which is where the discussion belongs.