Why Irresponsible Tax Cut Doesn't Work In Global Economy?

(Deepak Sarkar, 1/8/2006) www.kolki.com

 

Imagine a corporation giving away its capital back to investors because the CEO doesn’t know how to invest for the betterment of the company. That CEO will be fired right away by the Board of Directors! But, unfortunately, when it comes to Public Money and Welfare, that seems to be the Conservative Politician’s theory and belief.

 

World has created many renowned Management Institutions with mostly Public Money for the benefit of all people.  But Conservative Think Tanks try to preach two ‘Mantras’ -Tax Cuts and Interest Rates Cuts as the solution to all social problems. 

 

It used to ‘Trickle Down’ when the money from irresponsible tax cuts stayed inside the country! But now the end product is Deficit, Smaller Public government, Essential Services cuts, Higher education costs, Larger Military government and endless User fees.

USA under Bush Administration with 500 Billion Dollars Deficit is a perfect example of that failing ignorant Protocol.

 

In this global economy, most rich, who benefit the most from Conservative Tax Cuts, would never invest their public gift from tax cuts, inside the country when Bank Interest Rates are low and Return On Investment from Stocks are negligible or negative.  Thus, most of the public money lost due to tax cuts would be invested in the markets in other parts of the world, contributing to other country’s momentary economy to maximize private profit.

 

Only the Middle Class would dare to buy goods or invest that money inside the country.   While poor probably simply pay a tiny portion of their’ existing debts or have a feast for a change.

 

Thus the usual Conservative Antidote of Tax Cuts and Interest Rate Cuts seem totally counter productive in the global free market economy.   Rather, debt reduction, balanced budget and the promise of sustainable environmentally sound economy would attract domestic as well as foreign investors into country’s Banks and Stock markets. Current Canadian Economy is a concrete proof of this hypothesis being strongest among G8 countries.

 

Government surplus is good news like the savings in a family. A Government that runs in a deficit cannot help their citizens during natural calamity like Hurricane Katrina. People elect politicians to spend tax money wisely for the benefit of all. Thus irresponsible across the board tax cuts only prove a politician’s inability to understand the broadness of the Government and its true purpose to marvel a democratic society. 

 

Good economy doesn’t necessarily mean a healthy nation.  Largest economy doesn’t necessarily mean rich nation.  It is time to re-think and re-evaluate economic benefit ensuring that it benefits the people whose well being determines the true richness of a nation.

 

Terrorists can blow up buildings, buses, subway cars. But the effects of Irresponsible Tax Cuts are usually larger and lasting inside a country, and sometime throughout the world.

 

(Author: Deepak Sarkar, 844 Royal Oak Ave, BC v9B 6P6, Canada; Tel/Fax:250-412-2897; e-mail: kolki@kolki.com; Web site: www.kolki.com )