;m assuming the division is fifty-fifty so on a $100 billion in corporate profits $50 billion is retained earnings, and $50 billion goes to dividends. Of the $50 billion in dividends $10 billion is saved $40 billion is spend on consumption. So the total savings here is the $50 billion in retained earnings that the corporation reinvests in its business plus the $10 billion in savings that the stockholders would save. So $10 billion plus $50 billion equals $60 billion that will go into the financial markets as long as it is not collected in taxes. The remaining $40 billion in consumption spending by the stockholders would go into the consumer goods market. Now if the government collects it in taxes by means of a corporate tax of course it take the whole thing and spends all it on consumers goods and services. I think this a significantly more destructive tax even than the progressive income tax for economic growth because these retained earnings are the most powerful source of potential increases in capacity. These are funds that the business keeps, and can put directly back into the business. Actually this use to be worse than it is today back in 1960 23% of the federal governments revenues came from the corporate profits tax; today it’s down around 9%. According to the United States Department of Treasury in 1960 the corporate rate was 48% and for all practical purposes that’s like 50% percent of all corporate taxes went to the government; today it averages something like 35% percent. (Online) That’s a very bad tax for economic growth it’s bad for a long list for other reasons not the least of which, no body knows who pays this tax, nobody knows where the burden of this tax falls. Now all this was under the heading of reducing the amount that people are able to save.It also very helpful if you can reduce the amount they want to save that is if you want to reduce economic growth. How can you reduce the amount they...
