BOE: Prepare For The Negative Rates We’re Not Going To Implement
Markets looked for direction Thursday and found little in the way of guidance until the US cash session, when upbeat data drove Wall Street to a fourth day of gains.
The dollar looks poised to become a stumbling block for the risk rally eventually, but "eventually" wasn't Thursday.
There are some good reasons to expect a steady grind higher in US yields, and if that pans out, it could underpin the greenback, which is attempting a bounce after pushing to multi-year lows.
While not exactly an
I still find it fascinating. We’re on the brink of negative rates (or in negative rate regimes) in many DM countries because we cannot find the political will to tax the uber rich appropriately (at 95+%).
Wouldn’t be better to have a mildly positive real IRs, an upward sloping yield curve, lower deficits (yeah, they’re not real. Still. Too many people believe in them. It’s like religious dogma. Nonsense but only a fool acts as if others aren’t believers in said foolish things) and higher economic growth for all? All it’d cost us is less Chinese-made toys and higher taxation of Bezos, Musk and Gates…
Bezos, Musk, Gates et al are not going to produce the revenue….. raising taxes on the top tier is fine, there is an equity to it, but it is not going to raise serious revenue. A reasonable increase income taxes to the top 5-10% of taxpayers in the US is warranted as well as a reasonable corporate tax increase. However, to really get serious about spending more to rebuild our country and fix and improve our safety net a broad based VAT, structured to be moderately progressive versus income would open the door to properly funding health care for all, and funding social security in a generational more equitable way. This tax if implemented could cut the payroll tax far back or even eliminate it to lift the burden on wages paid and help the vast majority of taxpayers. I would also suggest that anyone earning less than 75% of the average of national income be exempted from paying income taxes at all (set a higher standard deduction for instance).
two thumbs up
Have you ever considered a career in public policy? You’re a markets person, IIRC, but you’d make an excellent progressive policy wonk. Weekend hobby, perhaps?
A progressive VAT is an oxymoron. Rich people spend a small proportion of their income and poor people a high proportion. Thus any tax based on spending is regressive even if you target ‘luxury’ items with a higher rate.
If payroll and income taxes phase in as income increases, then for low-income actors, VAT is offset by additional net income. Moreover, if an actor sitting on the low end of the income curve chooses to consume less, they can save more.
When combined with the elimination of other, nominally-progressive taxes that still impact even the lowest earnest, it seems to me that a VAT would be both progressive AND CHOICE-PRESERVING at the low end. Concur that it stops being progressive as we head higher on the income curve and actors’ marginal propensity to consume drops. However, income and payroll taxes phase in, creating a progressive component to tax policy.
I use all caps because the economic value of free choice is greatly understated. As UBI experiments have shown (granted, with mixed results) low-income actors do make rational decisions about excess income.
TL;DR – we cannot evaluate any tax in isolation if we want to employ a broad-base term like “progressive.” The sum of all of the taxation curves is the tax policy footprint on individuals’ necks.
Wealth taxes and poverty credits should be in the mix to re-heat economies.
global economic developments and macroeconomic news reports are always welcomed by this subscriber…