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A Comment or two....... Posted by Herb Hirsch [Email]  (#114)  [Profile/Gallery]
(more from Herb Hirsch) on Sun, 27 Jan 2008 11:19:17
In Reply to: What are you going to do with the tax gift......, Herb Hirsch [Profile/Gallery]
, Fri, 25 Jan 2008 12:54:38
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It is not completely true that the tax rebate will increase the Federal deficit by a corresponding amount.
Each time a consumer having received $600-$1,200 spends the money it is revenue for a business or other party. To the extent that the business earns an extra profit from the extra revenue, taxes are paid, thusly returning some of the rebate to whence it came.
Business expenses, not immediately taxed, include wages and inventory. These become taxable wages for the employees and revenue for a supplier of the business. The supplier in turn earns a profit which is taxed, and spends some of the extra money on more raw materials. And, the movement of this ever dwindling money continues through our economy.
The point of the above is that in the normal course of commercial activity, the money is taxed each time it changes hands. Economists who study this phenomena have determined that money generally changes hands 6-8 times before it has been taxed down to zero, tax money that flows to the US and State treasuries. These government treasuries gleefully spend the money adding to the effect of the tax rebate.
Yes, it is true that some of the money never makes it all the way through this economic phenomena....because it's stuffed under a mattress, and checks are lost or not cashed. Even money invested in tax-exempt investment vehicles eventually flow back into the economy where continuing tax bites are applied.
Comments regarding this post from professional economists are invited for further expansion and clarification regarding the above.
, Fri, 25 Jan 2008 12:54:38
, Mon, 28 Jan 2008 09:06:59, Sun, 27 Jan 2008 11:19:17 <-- Viewing This Message, Sun, 27 Jan 2008 12:57:30
, Sun, 27 Jan 2008 03:21:05, Sat, 26 Jan 2008 15:08:07
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