Capitalism or Communism? (1 Viewer)

[_dhj_]

But it's still a better option than income tax, which gives us less money to buy things with in the first place. (Which do people need - more incentive to work, or more incentive to buy?)

Both income tax and sales tax affect incentive to work and incentive to buy, but the degree to which they decrease incentives should not be exaggerated. If people don't earn enough (due to taxes), or if prices rise (due to taxes), they may well work harder to earn what they require rather than spend less or work less. The difference between income tax and sales tax is in their effect on income/wealth distribution. Sales tax is regressive in nature, whereas income tax is progressive.

 

[banco55]

But it's still a better option than income tax, which gives us less money to buy things with in the first place. (Which do people need - more incentive to work, or more incentive to buy?)

You need both otherwise the tax base is too narrow which creates it's own problems.

 

[withoutaface]

You need both otherwise the tax base is too narrow which creates it's own problems.

Tax base too narrow? You mean the group under the umbrella of "people who buy things"?

 

[withoutaface]

how would sales taxes work economically?

I understand the concept, but wouldn't it actually discourage buying, thus reducing the power of our economy- less jobs etc. ?

It'd work in essentially the same way as a flat income tax, which is flat, not regressive or progressive as someone said.

 

[Neurox]

LOL why r u guys arguing this.. just look at it, nearly all communist countries have failed. so clearly capatilism is the better system.....

 

[_dhj_]

It'd work in essentially the same way as a flat income tax, which is flat, not regressive or progressive as someone said.

Well no it's not flat because low income earners have a higher marginal propensity to consume. An aim of taxation is income distribution in a way which maximises utility. A regressive system does the opposite.

 

[withoutaface]

Yes, I agree that the rich tend to save more. But what happens to these savings? Do they usually sit in their bank accounts until they die? Or do they spend them at some point? Even if the former, these savings still get taxed when spent by whoever inherits their estate, so you get the same net effect as if the same proportion of income tax were taken off them (as they are that much less valuable to the holder).

 

[Not-That-Bright]

Yes, I agree that the rich tend to save more. But what happens to these savings? Do they usually sit in their bank accounts until they die? Or do they spend them at some point? Even if the former, these savings still get taxed when spent by whoever inherits their estate, so you get the same net effect as if the same proportion of income tax were taken off them (as they are that much less valuable to the holder).

It's not simply that they save more, it's that a higher % of their income can basically be spent on frivilous crap. Does it hurt you more if you've got less money to buy food or less money to visit the day spa?

 

[bshoc]

Yes, I agree that the rich tend to save more. But what happens to these savings? Do they usually sit in their bank accounts until they die? Or do they spend them at some point? Even if the former, these savings still get taxed when spent by whoever inherits their estate, so you get the same net effect as if the same proportion of income tax were taken off them (as they are that much less valuable to the holder).

One would think the rich are smart enough to hold their savings in financial instruments other than simple bank accounts, to prevent a 3-4% annual depreciation via inflation. One would also think the rich have enough resources to shelter their savings and liquid assets in tax havens offshore.

 

[bshoc]

It's not simply that they save more, it's that a higher % of their income can basically be spent on frivilous crap. Does it hurt you more if you've got less money to buy food or less money to visit the day spa?

Should it matter? One guy drops out in year 10 and gets a construction job, a second guy goes through the system, puts in the effort and pays 40k for his degree. Does the first guy deserve a cent of the second guys money?

 

[Not-That-Bright]

I'm merely playing devil's advocate here, trying to explain why such systems are seen as better by some people.

Essentially though I imagine the argument to your point would be that:

• It's not always a matter of effort.
• We should ensure that even those that put in less effort, still have a good standard of living.
• After people with less money have paid their essential bills, paid there small share for the public utilities etc there's little free money left over for the government to take - Unless you don't think healthcare/roads etc should be for all?

Personally, in a country like Australia (at the moment) I don't see as quite the same problem, most people could have a fine standard of living. The problem we have is that people don't want a fine standard of living, they want to go above and beyond that.

 

[bshoc]

Tinstaafl ...

 

[Not-That-Bright]

So you'd remove all basic services? If people are too lazy for whatever reason to get a job, just let them rot in the streets? I essentially agree with the concept, but I'm interested how you're applying it to our current conversation.

 

[bshoc]

So you'd remove all basic services? If people are too lazy for whatever reason to get a job, just let them rot in the streets? I essentially agree with the concept, but I'm interested how you're applying it to our current conversation.

I'm not, I'm being an abstact idiot lol

That part in bold especially is the one that intrests me, since its definition pretty much would resolve this discussion, there's certainly a difference between a one armed war veteran and a compulsive pot smoker refusing a job as say, a lever operator or something of that nature, even though both have the same essential ability to perform it. Theres also the question of whether the welfare system is a cheaper alternative to an expanded police force etc.

 

[Not-That-Bright]

Well I'd argue that all people should be given a standard of living to allow them to live, even if they're basically lazy pot-smoking hippies. Of course those with real reasons i.e. War Veterans, Young mothers etc should be given further assistance.

 

[Ennaybur]

well then you bring up the question - what is a worthwhile use of time/ constructive way of life. beign a pot smoking hippie may in most regards seen as a waste of person, but there may be value in that or a simliar way of life, that just isn't what the populus considers pragmatic.

 

[mr EaZy]

we should consider alternatives to these two

capitalism today isnt the same as it was 100 years ago before the depression which highlighted capitalism's weakness

we need to explore other economic systems so that we can critique our own

heres two:

Green eco : http://en.wikipedia.org/wiki/Green_economics

Islamic economics: http://www.islamic-world.net/economics/index.htm (looks like a good site)

http://www.jamiat.co.za/library/selected_papers_islamic_economics.htm

http://www.albalagh.net/Islamic_economics/economy.shtml

islamic economics is more to the centre. socialists like it in spirit but will not adopt it as there is private ownership of property and other stuff - they say that unless the state control production then it will not work...

 

[Capitalist Scum]

we should consider alternatives to these two

capitalism today isnt the same as it was 100 years ago before the depression which highlighted capitalism's weakness

we need to explore other economic systems so that we can critique our own

heres two:

Green eco : http://en.wikipedia.org/wiki/Green_economics

Islamic economics: http://www.islamic-world.net/economics/index.htm (looks like a good site)

http://www.jamiat.co.za/library/selected_papers_islamic_economics.htm

http://www.albalagh.net/Islamic_economics/economy.shtml

islamic economics is more to the centre. socialists like it in spirit but will not adopt it as there is private ownership of property and other stuff - they say that unless the state control production then it will not work...

Without interest where's the incentive to lend? Islamic economics is also stupid in that its ultimate aim is to ram one group's religion down everyone else's throats, which is unacceptable, even if that group is in the majority.

EDIT: So it also means that employers would have to take time out from doing what they do most effectively (i.e. managing the business) to do manual labour? Doesn't this interfere with efficiency?

 

[banco55]

Without interest where's the incentive to lend? Islamic economics is also stupid in that its ultimate aim is to ram one group's religion down everyone else's throats, which is unacceptable, even if that group is in the majority.

EDIT: So it also means that employers would have to take time out from doing what they do most effectively (i.e. managing the business) to do manual labour? Doesn't this interfere with efficiency?

Yeo islamic economics is mainly of interest for anthropologists rather than economists looking at ideas to adopt. The east asian economies like Japan, Korea, Taiwan, singapore etc. are probably the only ones with ideas different to western economies that are worth looking at adopting. Kevin Rudd's a proponent of industrial policy which is japan's forte.

 

[withoutaface]

Singapore's economy is essentially a free market with a few overtly heavy social restrictions.