Path: utzoo!utgpu!utfyzx!alias!kpicott From: kpicott@alias.UUCP (Socrates) Newsgroups: can.general Subject: Re: Flat-Rate Tax Message-ID: <468@alias.UUCP> Date: 27 Sep 89 13:03:56 GMT References: <1989Sep26.102844.6519@gpu.utcs.utoronto.ca> Reply-To: kpicott%alias@csri.toronto.edu (Socrates) Organization: Alias Research Inc. Lines: 37 In article <1989Sep26.102844.6519@gpu.utcs.utoronto.ca> golchowy@gpu.utcs.UUCP (Gerald Olchowy) writes: >2)I do agree that this is a bias for investment over consumption... >but (IMHO) this is what the North American economy desparately needs. I have to agree and disagree with this point. Yes, the economy desperately needs this bias. No, the GST will not help it. Someday the government will learn that increasing tax rates will only get more and more grumbling from the population at large, but they will STILL continue to pay it until it becomes physically impossible (witness the taxes on liquor, cigarettes and gasoline if you do not believe this). So how do we create the bias? To do this we need ("we" as in "Canada") to look at why people go into investment in the first place. It might be an entrepeneurial drive, a flair for the financial, or just an earnest desire to improve one's lot in life. But now the government is teaching us, through extended social aid (the state of which is a different topic entirely) that if we do not take care of ourselves, the government will handle it for us. (Notice I say "do not" and not "can not".) This provides an intrinsic security (like "job" security, only broader; maybe "existence" security?) that makes people unwilling to take chances in the investment arena, because it is not necessary for them. We now have the government presenting us with two sides of the same issue. (One might say this is hypocritical, but I don't think that an organization can have this characteristic. It's more like "the right hand doesn't know what the left hand is doing".) Human nature, being what it is, will naturally guide us to the easiest path; that of not investing and trying to grab all of the security we can get. IMHO if the government wants to stimulate investment they should do it not through over-taxation, but by spreading the message that the greatest risk is in seeking security. Complacency is the enemy, and taxation is not the solution; it is the aspirin for headaches, the coffee for waking up in the morning, the valium for going to sleep at night. (If anyone wants to convince me that these are good things I'd be happy to hear your opinion.) Hey B.M.; fix the cause and not the effect!