Comment 27138

By A Smith (anonymous) | Posted November 03, 2008 at 19:40:09

Richard, economics is not the new God, however, by studying how the economy works, one can begin to understand why bad things happen.

What my research has shown me, is that human actions always produce effects that counter balance the intended consequences of the original action.

For example, when people call for higher tax rates on the rich, they do so because they believe the rich are not paying their fair share.

However, as tax rates have fallen from 91% in the fifties, to the current 35%, the burden of paying taxes has shifted ever more to the rich. In effect, by being nicer to the rich, the government ends up getting more money from the rich.

However, now that the rich pay a greater share of social program costs, they also tend to get a higher share of the rewards. Better jobs, more wealth and all because they have taken on a greater share of the tax burden.

The funny things is , by raising tax rates on the rich, average people do end up helping their own economic well being. However, it's just not for the reasons they think.

By raising taxes on the rich, it shifts the tax burden back down towards the average earner. Therefore, by taking on more economic hardship, the average person also gets rewarded with better paying jobs.

Therefore, as to how this relates to free trade, perhaps I spoke to early. If raising taxes on imports ends up shifting the tax burden back down towards the average person, then that probably will help create better jobs, just not for the reasons most people think.

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