The "Buy Some Local Crap" Tax
Oct 2, 2008 General Nonsense |
The only way to pay the government's ballooning bills and reduce the budget deficit during an economic downturn is to tax the bejeezus out of the rich. The alternative is to borrow more money, thus making things worse. Realistically, cutting government spending is a worthy goal, but it won't get us where we need to be. So I have a suggestion. It's impractical, of course, but you wouldn't be reading this blog if you didn't enjoy noodling about impractical ideas.
Suppose the government passes a law requiring all relatively wealthy people, defined in some practical way, to buy extra crap they don't need from local providers. The relatively wealthy could dine out more often, buy some extra shirts, get a flat screen TV for the garage, whatever.
The result would be a stimulus to the economy that would lift all boats and fill the government coffers. The relatively wealthy wouldn't feel so bad about this form of tax because at least they end up with more shirts and flat screen TVs. This is the same principle as the $600 tax rebates, in terms of fiscal stimulus. But it wouldn't increase the deficit.
I know, I know, you will point out that our shirts and TVs are made overseas. But the local merchants get their markups, and that helps.
The best part of this clearly impractical plan is that the rich would have lots of options on how to spend their money. There is a lot of science supporting the idea that having freedom of choice is essential to happiness. I would be happier spending $100 on two shirts I don't need versus paying $50 in taxes and having no control over how it is spent. Everyone wins.
The hard part is figuring out how to measure this "extra" spending compared to the baseline, so you can be sure the relatively wealthy are complying. So perhaps it needs to be voluntary, like recycling.
I can imagine a new sort of credit card that is used only for the "extra" purchases, provided by the usual banks and credit card firms, but with one important feature: Everything you use the card for is public record, on the Internet.
I am convinced that the main reason people comply with recycling is that their neighbors can see who is being a good citizen on trash day. Peer pressure is important.
Obviously you wouldn't use the special credit card for beer and condoms, because the neighbors would be watching, or could be. I think this would induce people to buy harmless additional consumer items, or take extra domestic vacations, or buy extra birthday presents for friends.
Yes, this idea isn't practical. But how are the other plans looking?
Suppose the government passes a law requiring all relatively wealthy people, defined in some practical way, to buy extra crap they don't need from local providers. The relatively wealthy could dine out more often, buy some extra shirts, get a flat screen TV for the garage, whatever.
The result would be a stimulus to the economy that would lift all boats and fill the government coffers. The relatively wealthy wouldn't feel so bad about this form of tax because at least they end up with more shirts and flat screen TVs. This is the same principle as the $600 tax rebates, in terms of fiscal stimulus. But it wouldn't increase the deficit.
I know, I know, you will point out that our shirts and TVs are made overseas. But the local merchants get their markups, and that helps.
The best part of this clearly impractical plan is that the rich would have lots of options on how to spend their money. There is a lot of science supporting the idea that having freedom of choice is essential to happiness. I would be happier spending $100 on two shirts I don't need versus paying $50 in taxes and having no control over how it is spent. Everyone wins.
The hard part is figuring out how to measure this "extra" spending compared to the baseline, so you can be sure the relatively wealthy are complying. So perhaps it needs to be voluntary, like recycling.
I can imagine a new sort of credit card that is used only for the "extra" purchases, provided by the usual banks and credit card firms, but with one important feature: Everything you use the card for is public record, on the Internet.
I am convinced that the main reason people comply with recycling is that their neighbors can see who is being a good citizen on trash day. Peer pressure is important.
Obviously you wouldn't use the special credit card for beer and condoms, because the neighbors would be watching, or could be. I think this would induce people to buy harmless additional consumer items, or take extra domestic vacations, or buy extra birthday presents for friends.
Yes, this idea isn't practical. But how are the other plans looking?
Votes: +2
Comments
User Name: tartanmarine
Oct 7, 2008
0
Actually, the plan might work, but politics would kill it. To get those with money to spend more, you can use the tax system. If you want people to spend more in restaurants, you make eating out tax deductible. Or buying shirts. Or buying cars. If you want them to invest in the stock market and thus create jobs, you lower the capital gains tax. You could make only locally produced goodsand services tax deductible.
This works for charitable giving and for buying a home, where the interest and property taxes are deductible.
But politically, anyone who tried to do it would be accused of giving "tax breaks to the rich," which is the electoral kiss of death. So while the economics are good, the politics suck. That's because the vast majority of voters are ignorant of economics.
This works for charitable giving and for buying a home, where the interest and property taxes are deductible.
But politically, anyone who tried to do it would be accused of giving "tax breaks to the rich," which is the electoral kiss of death. So while the economics are good, the politics suck. That's because the vast majority of voters are ignorant of economics.
User Name: Tolkienone
Oct 5, 2008
0
I live in a small town and can not get my Botox injections locally. How does your plan provide for me?
T
T
User Name: tragicmishap
Oct 5, 2008
0
Your idea won't work because the business based on marketing research will bottom out. With publicly available consumer tendencies, market research firms would go out of business and negate any advantage gained.
User Name: another
Oct 3, 2008
0
You know, the rich folks could also form their own credit unions and loan money to folks with reasonable hats.
User Name: MarkV
Oct 3, 2008
0
RayKremer,
You're right, it sure worked for the last 8 years. And the Clinton years were an economic bog, thank god that's over. I say we cut taxes down to ZERO for the rich, that way the federal revenue will be INFINITE.
Four more years!
You're right, it sure worked for the last 8 years. And the Clinton years were an economic bog, thank god that's over. I say we cut taxes down to ZERO for the rich, that way the federal revenue will be INFINITE.
Four more years!
User Name: tomgintx
Oct 3, 2008
0
Congress will not pass a plan like this. It does not involve sending the money to Washington, where they can take out their share before sending it back to us.
User Name: chromepoet
Oct 3, 2008
0
Perhaps a enhancement would improve this basic approach. Instead of encouraging consumerism by the rich, encourage, with tax breaks, efforts by those who can invest to invest in local and regional businesses as an alternative to the stocks of multinational companies who only trade in the cheapest product made in the cheapest environment, which at the moment seems to be China. A collection of strong, regional economies should result in a better looking national economy.
Of course, then you'd need to encourage consumers to purchase from local and regional businesses, and there is the rub. Consumers could have purchased from local and regional businesses all along but elected instead to send their limited wealth out of the communities they inhabit, resulting in weak, local and regional economies that combined resulted in a weak national economy.
Why punish the rich for the ill-advised practices of mass consumers? Tax the people who caused this mess: Naive consumers who crowd malls and marts.
Of course, then you'd need to encourage consumers to purchase from local and regional businesses, and there is the rub. Consumers could have purchased from local and regional businesses all along but elected instead to send their limited wealth out of the communities they inhabit, resulting in weak, local and regional economies that combined resulted in a weak national economy.
Why punish the rich for the ill-advised practices of mass consumers? Tax the people who caused this mess: Naive consumers who crowd malls and marts.
User Name: jpmd
Oct 3, 2008
0
Two days late, but a wonderful job of reporting that offers more insight into how the problem spiraled out of control:
<http://www.nytimes.com/2008/10/03/business/03sec.html?_r=1&hp&oref=slogin>
or <http://www.nytimes.com/2008/10/03/business/03sec.html?amp;hp=&_r=2&oref=slogin&adxnnlx=1223039146-uzOB39AgKH2WUxGTTGcVoA&pagewanted=print>
<http://www.nytimes.com/2008/10/03/business/03sec.html?_r=1&hp&oref=slogin>
or <http://www.nytimes.com/2008/10/03/business/03sec.html?amp;hp=&_r=2&oref=slogin&adxnnlx=1223039146-uzOB39AgKH2WUxGTTGcVoA&pagewanted=print>
User Name: RayKremer
Oct 3, 2008
0
Stop right at the first sentence. Raising taxes, on the rich or whomever, shrinks the economy and reduces tax revenue. Cutting taxes brings in more money for the federal coffers.
User Name: gargamel9
Oct 3, 2008
-1
Im sure most people on this blog have already read freakonomics...so I will just point out to the fact stated in the book, that I have seen in action already three times since I read it on the book (just last month) that: “for any positive incentive that is created, instantly as if by magic, 50.000 people start to come up with ideas about how to hose the state/company/ whatever to get an advantage and extra profit from thatâ€.
So although I think it’s a great idea, I would suggest that the best way to test it would be to try to come up with ideas about how to take advantage of that plan. If we come up with one or two that will greatly exploit the plan…we can conclude that it wont be feasible in practice, despite we like the plan or not (it sounds good to me but I think thousands of people would find instantly ways to take advantage of it and possibly negate some or all the good effects).
When I worked in programing that how we tested my work..I gave it to my ex-fiance and he proceded to try to find all the things that might go wrong. You woldnt believe the weird imposible combinations of clicks and comands she came up to make it fail. It was like magic to me.
So although I think it’s a great idea, I would suggest that the best way to test it would be to try to come up with ideas about how to take advantage of that plan. If we come up with one or two that will greatly exploit the plan…we can conclude that it wont be feasible in practice, despite we like the plan or not (it sounds good to me but I think thousands of people would find instantly ways to take advantage of it and possibly negate some or all the good effects).
When I worked in programing that how we tested my work..I gave it to my ex-fiance and he proceded to try to find all the things that might go wrong. You woldnt believe the weird imposible combinations of clicks and comands she came up to make it fail. It was like magic to me.
User Name: cressie176
Oct 3, 2008
+3
Just get married. Hey presto a house full of crap you don't need.
User Name: JasonF
Oct 2, 2008
0
There's an underlying assumption in your proposal that isn't true. The assumption is that without this policy, the money wouldn't get spent. The only way this would increase spending is if the rich people are currently hoarding cash under their mattresses or some similarly silly place. All money is either spent, invested, or saved. Money that gets invested gets spent by someone else. Money that gets saved in banks gets loaned out to someone else and spent. Find a way to get the money spent more efficiently, and you'll get actual growth.
User Name: Treetrunk123
Oct 2, 2008
+2
How does Scrooge McDuck swim in a vat of solid metal coins?
But you have a point. There were a lot of happy people working for Uncle Scrooge. A pilot, a butler and a security guard among others.
As for stealing gold, it is true that FDR took people's gold and replaced it with worthless scraps of paper.
Gold is just a metal that is pretty and has a low oxidation state. When the rich buy this, the money goes to someone else. What is better, buying and selling gold for profit or having some privateer kill for gold? I give the pirates in Blackbeard's day credit. At least they were smart enough to not kill the people on the ship.
Another thing. I just wish they would quit calling the golden goose the golden goose. It's not. It's the goose that lays the golden eggs. "The golden goose" is a misnomer.
But you have a point. There were a lot of happy people working for Uncle Scrooge. A pilot, a butler and a security guard among others.
As for stealing gold, it is true that FDR took people's gold and replaced it with worthless scraps of paper.
Gold is just a metal that is pretty and has a low oxidation state. When the rich buy this, the money goes to someone else. What is better, buying and selling gold for profit or having some privateer kill for gold? I give the pirates in Blackbeard's day credit. At least they were smart enough to not kill the people on the ship.
Another thing. I just wish they would quit calling the golden goose the golden goose. It's not. It's the goose that lays the golden eggs. "The golden goose" is a misnomer.
User Name: Treetrunk123
Oct 2, 2008
+2
I just now noticed that the cow was female. Very subtle and very sneaky.
User Name: gozar
Oct 2, 2008
+1
I think wealthy people already buy a lot of stuff and services - do you think the rich are all like Scrooge McDuck and keep their vast fortunes in opulent basement vaults?
This only works as long as they are feeling secure about the economy.
Just ask any yacht broker what happens when the news is bad on the financial page.
This only works as long as they are feeling secure about the economy.
Just ask any yacht broker what happens when the news is bad on the financial page.
User Name: Treetrunk123
Oct 2, 2008
+2
Scott Adams, these comics are the best I've seen in a long time from any comic. I wonder if they were inspired from those throwaway comics you did on the cows and Dogbert that never got published.
User Name: Treetrunk123
Oct 2, 2008
+2
Every bill passed in the Senate already does this. Government giving subsidies to buy wooden toys and other yard sale crap. CBS's radio station said this was needed to get the bailout bill passed.
The Democratic Party and their pet Republicans are making some really big carbon footprints with this bill.
The Democratic Party and their pet Republicans are making some really big carbon footprints with this bill.
User Name: OrionStyles
Oct 2, 2008
0
Well, we should force the rich to purchase robots and not let them do what they want with their money,
We will build better and better robots as the rich are forced to buy more and more robots.
Eventually robots will become a commodity. Cheap and useful.
It won't be long before you have a whole collection of robots, so you don't actually have to do anything you don't want to anymore. The work oil can produce has nothing on robots.
Don't want to prick fruit for a living? Send your robot and get the residuals.
Need a house? Make your robot build one.
What? The miltary wants to send you to fight Iran? Send one of your robots instead.
We could even hand down older robots to the needy. Eventually the robots will be so powerful that the needy won't care they have a 10 year old model when it can fullfill all their basic needs for survival, and let them do no work at the same time!
Imagine a world where you can instantly get what you want when you want... via robot slaves. Who would take on debt based money from fractional reserve ratio banking insanity? Nobody! The value is in the robots, not the imago-dollars and "promises to do work" system we have now... we would be forced to have a robot backed currency, so forget gold! You can cash in USDs for an equal value in robots.
We will build better and better robots as the rich are forced to buy more and more robots.
Eventually robots will become a commodity. Cheap and useful.
It won't be long before you have a whole collection of robots, so you don't actually have to do anything you don't want to anymore. The work oil can produce has nothing on robots.
Don't want to prick fruit for a living? Send your robot and get the residuals.
Need a house? Make your robot build one.
What? The miltary wants to send you to fight Iran? Send one of your robots instead.
We could even hand down older robots to the needy. Eventually the robots will be so powerful that the needy won't care they have a 10 year old model when it can fullfill all their basic needs for survival, and let them do no work at the same time!
Imagine a world where you can instantly get what you want when you want... via robot slaves. Who would take on debt based money from fractional reserve ratio banking insanity? Nobody! The value is in the robots, not the imago-dollars and "promises to do work" system we have now... we would be forced to have a robot backed currency, so forget gold! You can cash in USDs for an equal value in robots.
User Name: arbyisme
Oct 2, 2008
0
Lets see. Encourage conspicuous, ostentatious, exorbitant transparent spending by the rich. Wonder how this will go down with a struggling lower income family seeing some fat cat gadfly drop 10 grand on an set of exotic end tables for his fourth vacation home.
Will really make them feel good while they are suffering foreclosure on their home, found out their employer just merged with another company wiping out the pension plan and making their job redundant. Ops, wife just learned that she is pregnant, again. Let the good times roll. Can we spell REVOLUTION...
But you are right Scott I do not have a better plan to offer and it is easy to criticise anyone who offers a solution. I just wish our leaders would go back the basic principles envisioned by the founding fathers as stated in the Constitution. A government of laws (not rulers) was created to work for the people, not other way around.
Will really make them feel good while they are suffering foreclosure on their home, found out their employer just merged with another company wiping out the pension plan and making their job redundant. Ops, wife just learned that she is pregnant, again. Let the good times roll. Can we spell REVOLUTION...
But you are right Scott I do not have a better plan to offer and it is easy to criticise anyone who offers a solution. I just wish our leaders would go back the basic principles envisioned by the founding fathers as stated in the Constitution. A government of laws (not rulers) was created to work for the people, not other way around.
