The two major American political parties are usually in a constant tug-of-war over their policy agendas and spending proposals.
The Democratic Party believes in increasing taxes on corporations and capital gains to fund social service programs that help the poor and middle-class citizens. The Republican Party believes lowering taxes on corporations and capital gains will permit businesses for being more innovative.
The Republican economic philosophy is a lot more innovation brings about more organizational growth, jobs, and wages. But the counterargument from your other side is only the wealthy and powerful have assets with capital gains. Because of this, the wealthy can pay for to pay higher capital gains taxes to finance the welfare with the working poor.
What is missing because of this counterargument may be the possibility of innovation. Wealthy funding your company and investors are responsible for helping new and innovative companies become large corporations employing many people.
One with the reasons why investors take such risks is usually to enjoy a potential profitable return. Unfortunately, capital gains tax hikes make investors more often unwilling to invest in innovative companies using the potential to customize the world. If politicians increase capital gains taxes, it usually forces investors to advance their money toward a safer investment, for example bonds or stocks that pay a superior dividend.
Friedrich August von Hayek once said, “I don’t even think it is an exaggeration to convey history is essentially a history of inflation, usually inflations engineered by governments for your gain of governments.” Capital gains tax increases to advance social welfare programs will bring about higher inflation and fewer innovation. Hayek understood that most inflation throughout history might be attributed to tax increases and government overspending.
A society cannot evolve in case a government funds the welfare of the company’s people. It can only evolve through innovation, entrepreneurship, and creativity. That is what Hayek believed 50 plus years ago, and his awesome philosophy remains to be relevant today. However, we have a significant portion from the modern population that identifies as socialist and progressive. Their thinking is much more in line with famous social economists like Karl Marx.
“Capital is independent and contains individuality, even though the living individual is dependent and it has no individuality.” Karl Marx thought capitalism robbed people of these freedom and individuality for your benefit in the upper class. A society that puts innovation and funds above the welfare of folks would result in internal tensions and conflict. That may be the Marxist economic philosophy.
Overall, a society with a lot more social welfare and much less innovation cannot create more jobs and opportunities. If progressive politicians would like to keep funding social programs with money that will not exist, it is going to only reduce innovation and increase inflation. Even if the rich did pay higher capital gains taxes, the us govenment does not generate enough income to afford all its proposed social programs.
Perhaps the us govenment could at the very least spend money on innovation as long as they won’t allow investors to get it done.