6/19/2006

06-19-06 - 1

06-19-06

One of the best ways to encourage employment in the U.S. would be to have the government cover medical & pension expenses. Currently, employers cover salary, as well as health care, retirement/pension, and pay the unemployment taxes, etc. For a worker of salary X, these other costs are often X again or more. If instead the government covered all of these, not only would employee change be easier (see my previous rant on this), but also the cost of employment would be greatly reduced, making it more appealing to have more employees. Currently you have almost ridiculous measures in automation to try to reduce the number of employees because the cost of having employees is so high. (one that comes to mind is garbage trucks with these fancy robotic arms so that they can have just 1 person driving - there's no way that saves money compared to a basic truck with 2 humans, unless the cost of that human is just ridiculous).

Where would this money come from? The general tax fund of course. Similarly, there's this talk of adding an extra tax on "windfall" profits from oil companies, and complaints about executive pay. That's sort of ridiculous and unnecessary. Instead you should just have a very steep progressive tax on corporate profits and salaries. If some executive wants to give himself a $100M salary, okay, that's fine, but the income above $10M should be taxed at 50% or something. Similarly, corporate profits over $1B or so could be taxed at a very high rate.

Now, the idea that this would be restrict the economy is ridiculous. In recent years the Bush tax cuts have gotten some credit for stimulating economic growth. That's absolutely preposterous. If the tax cuts did have any stimulating power at all (which is dubious), it's over a longer period as markets and companies adjust. 99% of the short term growth and liquidity has come from the Fed - the Fed interest rate is a much more powerful and immediate tool for economic stimulus. Low interest rates and a booming housing market and defecit spending have created a glut of capital.

If you really want to stimulate the economy you should eliminate all the little ridiculous taxes. Sales tax should go completely. All taxes on small transaction like that should go. Import & Export taxes should go, though that's more complicated and you may have to add "taxes" to compensate for certain costs (as I'm about to describe). Similarly, to make a capitalist system run properly, certain costs should be attached to the goods that create those costs. For example, a gasoline "fee" should be added which covers the estimated cost of removing the CO2 and pollution caused by that gallon of gas (as well as health care costs).

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old rants