Um, no. Marginal Propensity to Consume is the ratio of the change in income relative to the change in consumption. It has nothing to do with "consumption growth already occurring" as you incorrectly stated. Stimulus is determined by a multiplier, which is calculated by 1 / (1 - Marginal Propensity to Save + Marginal Rate of Taxation + The Marginal Propensity to Import), which all sums up to 1 / (1 - The Marginal Propensity to Consume).
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Okay. Let me ask you a question.. Can the marginal propensity to consume increase in the absence of a tax cut? If it can.. then how do you know that your tax cut increased Consumption?
The only way to know that is if the
increase in propensity to consume was GREATER than what was occurring prior to the tax cut.
All things equal, if marginal rate of taxation declines, individuals can consume more. With a greater propensity to consumer, this increases the multiplier. If the multiplier is positive (or not zero) there is stimulus. I can tell you've never studied macroeconomics.
Right.. and that assumption that "all things equal".. is not valid. A tax cut could simply be absorbed by people now having more money to save.. or more money to import.
I don't think you study statistics or econometric either. Are you trying to tell me that one company is representative what is occurring in the broader economy?
It appears to me that you have problems with reading comprehension. I did not say that.
Are you trying to tell me that Harley Davidson shedding jobs SUPPORTS that the tax cuts are working as presented? I would hope you would not. It still constitutes evidence that the tax cuts may not be working. NOW.. IF the economy is creating overall millions of jobs BEYOND what it was creating before the tax cuts.. then you MIGHT be able to say the tax cuts are a stimulus. but only if job creation is GREATER than would be expected with the job creation trend PRIOR to the tax cuts.
See.. I have a research degree, and have studied economics.. in fact I have taught economics and business and have more than a basic understanding of correlation and its weaknesses.
The thread is about Harley Davidson, not other companies. No one is diverting anything but you.
interesting.. that's exactly right.. the thread was about HArley Davidson and not other companies. that's the point. So.. is Harley Davidson shedding employees.. indicative of the tax cuts working or not?
It's not "depending on the type of tax
of course it depends on the tax. A tax say on luxury cars produced in America is going to have an effect. In fact..the luxury tax that was put on US luxury ships had a dramatic negative effect on US shipbuilding back in the early 1990's. So yep.. different taxes effect the economy differently.
It's a major component on a corporation's ability to effectively borrow money, achieve cash flows and provide returns to all owners of capital.
Hmmm...You do realize that an increase in corporate tax rate will actually decrease your cost for capital because of tax shielding (since interest is tax deductible)..
However, that's really beside the point. your cost for capital is not going to have much influence on your production decisions, labor decisions etc...
But you go ahead.. you explain to me.. why I won't outsource my production to China. which will save me 10 million in labor costs (even including shipping costs).. because my corporate tax rate has gone down.
I look forward to your reasoning.
