Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
again... you're saying that taxation reduces M... it doesn't.. M is fixed (except when we print more money, then it goes up). The government doesn't take your money via taxes and incinerate it. In a micro world, taxation vaporizes money. In a macro world, "M" in your equation is a fixed value.
Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Ok, that still doesn't help your case any... If the Apple farmer stops farming just to live off of the government, then not only has he become a drain on our wallet, but he is no longer producing a good for us to trade with the neighbors (other countries.) Creating a shortage of apples in his country which will drive the price up hurting the horse rancher even more. Then he decides to import apples from another country but the government taxes him for that one too....
again... you're saying that taxation reduces M... it doesn't.. M is fixed (except when we print more money, then it goes up). The government doesn't take your money via taxes and incinerate it. In a micro world, taxation vaporizes money. In a macro world, "M" in your equation is a fixed value.
Money basically does vanish into thin air when the government has it. BEFORE the Porkulous Bill there was already a $9 billion dollar surplus nationally in the funds for highways and roads... not there are Billions more yet very little of it is being spent... That in NO WAY HELPS THE ECONOMY! Period, your entired Macro/Micro diatribe is flawed because there are grey areas. AKA The Government, who is a seperate entity that does hold a LARGE amount of our money.
again... you're saying that taxation reduces M... it doesn't.. M is fixed (except when we print more money, then it goes up). The government doesn't take your money via taxes and incinerate it. In a micro world, taxation vaporizes money. In a macro world, "M" in your equation is a fixed value.
it is not a fixed value in this instance because we are going to be using the money that we are being taxed to also pay off the debt that we as a nation owe to other countries. it is leaving our system. It may as well be incinerated.
Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Ok, that still doesn't help your case any... If the Apple farmer stops farming just to live off of the government, then not only has he become a drain on our wallet, but he is no longer producing a good for us to trade with the neighbors (other countries.) Creating a shortage of apples in his country which will drive the price up hurting the horse rancher even more. Then he decides to import apples from another country but the government taxes him for that one too....
Good job, Puro.. You're finally getting to the next step in the macro example, but in order to do this, we need to start talking about a society with a larger number of individuals. The person who chooses to quit producing apples and instead "live off the government" becomes a vehicle for rapid circulation of currency. That person is provided enough money to purchase essentials, but he's not going to be buying any yachts. Now, the real smart guy is his competitor, who chooses to continue selling apples, and suddenly sees his market share increased. He will produce and sell more apples. His income and wealth will be increased. His taxes, of course, will be increased, but only as a percentage of his increased income. His net income will be increased.
Except that in my metaphor, the neighbors were a country, and that the other communities were other countries with their own economies.. that's where the macro part came in... if you're going to talk about taxation, you have to talk on a macro-economic scale.. that's why all the silly anecdotes of an individual or set of individuals, with some government as an external entity, and the vanishing of money into thin air whenever you say "tax" is entirely invalid, from a macro standpoint.
Ok, that still doesn't help your case any... If the Apple farmer stops farming just to live off of the government, then not only has he become a drain on our wallet, but he is no longer producing a good for us to trade with the neighbors (other countries.) Creating a shortage of apples in his country which will drive the price up hurting the horse rancher even more. Then he decides to import apples from another country but the government taxes him for that one too....
Good job, Puro.. You're finally getting to the next step in the macro example, but in order to do this, we need to start talking about a society with a larger number of individuals. The person who chooses to quit producing apples and instead "live off the government" becomes a vehicle for rapid circulation of currency. That person is provided enough money to purchase essentials, but he's not going to be buying any yachts. Now, the real smart guy is his competitor, who chooses to continue selling apples, and suddenly sees his market share increased. He will produce and sell more apples. His income and wealth will be increased. His taxes, of course, will be increased, but only as a percentage of his increased income. His net income will be increased.
Or, he is bumped into a higher tax bracket and actually brings home LESS money and is working twice as hard to to produce more apples. After a while he sees it is easier to live off of the government too. And don't say that couldn't happen because it has happened to me. I got a raise which put me into a higher tax bracket and I actually brought home LESS that I was before. Your equations just don't add up. As Kuzi said, Macro and Micro go hand in hand. They must co-exist in order for there to be balance... It isn't like Supply side and Keynsian. They aren't two opposite methods.
Not knowing anything about your situation, my first inclination is that the timing was such that your gross income on the year had pushed you into a new bracket. If you hadn't received your raise, your net take-home pay would most likely have still been lower. You see this all the time with people who are employed part-time, and with permanent employees starting a new job. Your taxes are withheld according to the gross income that you have made thus far. When you cross each threshold, your withholding rate increases. This has nothing to do with any raise you may have received.
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