The Zero Inflation Taxation Policy will make our economy more productive and more efficient in preventing poverty. It will help lower the amount of taxes needed to support social programs. It maintains demand more closely to the production capabilities of our economy and maintains normal consumption demand during the economic cycles of high inflation and deep recessions.
Instead of waiting for the Federal Reserve, the US government or State governments guessing how to balance the economy with higher or lower interest rates, changes in the tax code or other policies which are all monetarily, or politically motivated, the economy itself would automatically self balance the economic guiding policies, and tell us, the people, when it needs more money (demand) in the economy or less demand (money) in the economy.
If the economy had excessive demand occurring, the excessive demand would be reduced from the top of the economic ladder with the income tax. Currently demand is reduced from the bottom of the economic ladder, with higher interest rates which increases the cost of the medium of exchange which the enterprise system needs to function, which increases unemployment, and bankruptcy in the small business community and people lives. With excessive demand reduced from the top of the economic ladder, by the income tax, normal production and consumption can continue without raising cost, and the price structure of our economy, which raises the cost of our products and services, this in turn the competitiveness of our products in the world markets. Higher interest rates increases poverty and government social liabilities and our taxes, as more people become government dependent.
The Zero Inflation Taxation Policy would work like this. During a recession or normal economic times the income tax code would remain as currently is. Except to lower the rates as our economy became more efficient, and more people are included in the private sector of the economy. If inflation started to occur, based on a true Consumer Price Index that included a more complete basket of goods and services, the interest deduction would be reduced based on the inflation rate. At the same time the tax on savings and debt investments would be decreased by the same percentage amount, based on the inflation rate. As inflation subdued the percentages would change back to O%. This would maintain the balance of economy without creating a recession with higher interest policies used by the Federal Reserve. People at the end of the year would balance the economy by paying a little less tax or a little more tax based on the how the economy was operating. The correction in values between money and hard capital assets remain in closer balance each year instead of have a recession to re-balance the values as we are going through now with the Great Recession of 2008
Thus, solving deep recessions and high inflation cycles. Raising the standard of living of all our citizens, decreasing poverty, and closing the gap with work, between the classes.
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