The recent success of GM’s rebate program giving consumers the same prices as their employees gives me an idea that if a similar program is adopted by major products and services such as housing, appliances,medical services etc. could lead to a boom.There is even a precedence ( although not a very successful one) on the Republican side. I am referring,of course, to the Supply Side Voodoo Economics program. Tax cuts were supposed to usher in investment and boom times. I think the program I have outlined will increase demand and is more likely to result in employment, higher tax revenues.
What do our resident economic mavens think about this?
The auto industry has cut prices because they had to in order to compete.
The housing market is nuts right now. Investors are driving property prices to record highs because the stock market has not been so hot lately. many believe this has caused a housing bubble, that could burst at any time leading to plummeting housing prices and bankrupting many. So, take housing off your list — either there is a bubble that will burst with devastating effects on the economy, or there is no bubble and investors will keep driving the market.
The medical services industry is controlled by two factors: Big Pharma, and insurance companies. Both are doing very well, so don’t expect the medical services industry to make price cuts any time soon.
And the government can’t tell any industry what to charge unless that industry has an anti-trust exemption (though it can protect against price fixing). The market determines prices. And that simple fact reveals the problem with supply side economics. The economy is driven from the bottom up, not the top down.
The real fix would be to raise taxes on the upper classes and increase social services for the lower classes (universal healthcare, food stamps, free school lunches, subsidized day care, etc). This would enable the lower classes to turn more of their income to disposable expenditures rather than necessities. In essence, it would mean more people would have more money to spend. Businesses would benefit from having more potential customers. The upper classes benefit because they invest in or own those businesses that would have more potential customers. Employment would go up because businesses with more customers need and can afford more employees.
I was thinking of enacting targeted tax cuts for those corporations that offer their products and services at a discount over the prevailing prices in the market.Such a cut would be attractive to businesses and would not come in the way of profitability.It would have the advantage of putting money in the hands of the consumers directly.Of course, your idea of offering Universal Health Care and other social needs would also relieve business of an escalating cost burden and should be part of any overall plan to revive our economy.
The problem with your tax cut plan is that some 60% of U.S. businesses already don’t pay any federal taxes.
As a small businessman myself I can tell you that your figure of 60% may be true for corporate giants like GE and others but not me.I can’t remember a single year in which we have not had to pay any taxes.
I think a targeted tax cut would have a great appeal to me in my business.I would be equally supportive of a Universal Health Care plan along the lines of the Canadian system.And, of course, a federally funded retirement plan would also relieve us small business people of a lot of burden we have to carry.
The cost of doing business in this coontry is so tied up with health costs and retirement,any relief would dramatically increase our ability to compete.The Europeans and the Canadians have a big advantage over us in this regard.Just my 2 cents.
Here is where the 60% figure comes from:
Maybe the IRS has gotten more strict and more businesses are paying their fair share. I dunno. And maybe this does just mean the giants, since it says ‘corporations’. But your proposal was for major market segment products, most of which are made by the giants, no?
That’s why I think healthcare, daycare, and as you point out, a real government retirement system beyond social security, would go a lot further to helping the economy than the tax cuts you suggested originally. But I am not a businessman and profess no great knowledge of the subject of small businesses, so you may be right.