random thoughts from gay shanghai

Remember this post?

Well, i've been trying to come for reasons why it didn't work out as planned.

The first thing that comes to mind is that even if you give the money to the govt in taxes, it'll still spend it on stuff, and sending it back into the economy. So it has the same effect.

But there must be more. As a progressive, I believe in the redistributional effect of taxes, it's a means of taking money from the affluent to less wealthy. Take away taxes and what happens? The rich make more and more while the poor have less and less money and government help at their service. The problem is, those rich people aren't just going to poor all that more money into the economy, they'd ship it overseas or invest it in the housing market which then busts at some time because there's too much capital in there and prices go through the roof. Whereas poorer and lower middle class incomes would still spend that money on stuff like food, holidays, clothes etc, all those commodities with "real" prices which keep the economy healthy for a great part.

Now one question has been nagging at me for a while. We all would like the perfect society, where we pay just enough taxes to ensure the government can take care of us all and keeps the economy healthy. Can't we just compare all those countries with different systems and just see which one has the best? Of course, not all are the same, for example Norway is a great country I guess, but it does get a lot of income from natural gas. Still, can it really be that hard?