In other words, billionaires/oligarchs have sequestered so much cash that it has outrun investment opportunities. What does that tell you about the theory that tax reduction spurs investment?
It's more like a heart attack. There's plenty of blood, but the circulation to the heart itself (the people, ie demand side) has stopped. The doctor is pumping ever more blood into the patient without fixing the clogging to the heart itself.
Helicopter money which deletes loans (meaning it would not punish people who did not borrow) would be a far better strategy in this case, and lead to both inflation and deleveraging at the same time, something which is impossible with other methods.
I guess it's not a penalty if you are able to invest the money you get from the helicopter drop in assets, or a sweet gaming rig, while other people are just paying down debt?
On the theory that everyone gets cash, and for those with debt, the cash goes to the debt first, sure. But If I'm reading the proposal correctly, the argument is to just drop money into the debts. Suckers who lived responsible lives up front are left in the dust. This seems ... not healthy for society in the long term.
The overall statement is a fallacy, correlation does not imply causation. There are plenty of good investment opportunities out there, the truth is that you need to find them yourself. The next big companies in the world are purely in their "unfunded idea" stage.
Also the whole tax reduction statement is mostly an opinion. From what I've seen, most companies are almost purely motivated by the risk-adjusted post-tax profit that can be obtained from the investment. Every idea on the drawing board is effectively evaluated meticulously on this basis. If that number isn't to their liking then the research/project simply never gets funded. The company might opt to simply do share buybacks or pay a higher than normal dividend. Plus the overall argument is mostly junk because the United States heavily reduces taxes for companies that perform R&D through the R&D tax credit.
1. “Plenty of good investment opportunities” does not treat their aggregate value compared to cash removed from the economy. I reiterate, in plain English. There is more of that cash, way more, than realistic investment opportunities. Don’t believe me? Look at the crazy vanity projects, either started or under consideration. Settlements on Mars. $500B Saudi cities.
2. “From what I've seen, most companies are almost purely motivated by the risk-adjusted post-tax profit that can be obtained from the investment. Every idea on the drawing board is effectively evaluated meticulously on this basis.” I couldn’t agree with you more, at least when it is done rationally. And precisely because taxation is MULTIPLICATIVE, tax rates have little effect on investment decisions. Look at the 1950’s. Indeed, I suspect, (paradoxically?) that high tax rates encourage investment. The investment cost is effectively discounted by the tax rate.
