Avoiding taxes is the key to growth. It spurs factory building, hiring, and production.
It does spur corporate reinvestment but it does NOT spur growth. Profit motive is what spurs growth and higher taxes ------- profits.
#10 | POSTED BY JEFFJ
Reinvestment - probably
Growth - absolutely not. Lower taxes spur growth. It's the risk/reward paradigm.
#13 | POSTED BY JEFFJ
Jeff... you're talking yourself in circles here. I actually kinda agreed with you when I read your first post (really depends on how you define "growth"), but then you posted the second one and destroyed it.
Taxes, higher OR lower, can spur investment. Higher taxes (depending on how they are structured) penalize withdrawing money from the company, so any investment outside the company is less rewarding in comparison to re-investing in the company. Hence, it drives investment that is internal to the company. Lower taxes increase the potential return on your money, so stimulate investment (increase the reward compared to the risk, so more money will be invested until the risk/reward is brought back to normal).
But, whether investment leads to growth is a different question. Ultimately, all the investment in the world will not do you any good if there is not an increase in demand for your products (well... you could invest in efficiency, thereby decreasing your costs, but that does not stimulate growth unless you also decrease price to increase demand, but that is an edge case). It doesn't matter HOW MANY widgets you can make if no one wants to buy them.
So, ultimately Danni was the most correct with her statement "The only way to boost a consumer driven economy is for the average consumer to have more money in their pockets." Consumers having disposable income to be able to BUY your products is what drives growth (and the edge case above conforms... if you decrease the price of your product then consumers essentially have "more" money to buy it with). Tax policy can push it a little bit one way or the other on the margins, but it is really insignificant compared to the effect of consumers' disposable income.
Sorry Jeff... looks like you need to go back to Econ 101 as well.