Sunday, April 13, 2014
Total Taxes on Wages Are Rising
In response to the recent recession, a fiscal expansionary policy was put into place in many parts of the world including the United States, cutting taxes to increase spending and promote economic growth. However in the past few years the trend has reversed in an attempt to lessen the government debt in the United States. Income taxes are now nearly back to where they were in 2007 and the whole recession began. Many countries are looking into ways to shift the tax burden through methods such as fiscal devaluation where the employers costs are cut through reducing payroll taxes.. It seems like there is always a back and forth between which should be done in the economy, growth? or reducing the deficit? It is hard to say whether one is more important than the other, but aybe a new idea like fiscal devaluation will be able to help some economies.
http://www.nytimes.com/2014/04/12/business/economy/total-taxes-on-wages-are-rising.html?ref=economy
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Devaluing a currency may possibly ease the tax burden but only temporarily... in the long run it won't make a difference and playing around with inflation can have a whole host of other problems. Unfortunately when you are spending more money than you have you can choose to do one or two things 1) make more money (increase taxes) or two 2) reduce your spending. Other activities can help but at the end of the day those are our two options as a nation for long term debt reduction - which should be a priority.
ReplyDeleteIt is important to note what we just learned in class about the LRAS staying fixed in addition to your comment above.
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