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Fiscal Cliff Notes

Hig Wrote: Dec 05, 2012 10:09 AM
When the government taxes corporations (big or small), it is taking money that the corporations could have used to purchase labor, services, raw materials, finished products, etc. The government then uses the taxes it collects, spends a majority on itself to keep the lights running, and pays all the people it needs to confiscate corporate earnings. With the pittance remaining, it buys labor, services, raw materials, finished products, etc. The difference is it buys much, much less than private corporations could have bought if tax rates had not risen. Big government "stimulus" programs work much less effectively and much less efficiently than corporate investments. They create a net loss of funds available to invest in the economy.

Amid all the political and media hoopla about the "fiscal cliff" crisis, there are a few facts that are worth noting.

First of all, despite all the melodrama about raising taxes on "the rich," even if that is done it will scarcely make a dent in the government's financial problems. Raising the tax rates on everybody in the top two percent will not get enough additional tax revenue to run the government for ten days.

And what will the government do to pay for the other 355 days in the year?

All the political angst and moral melodrama about getting "the rich" to pay...