A question about gibs and taxes.

[Pimpleking55]

Can anyone answer a question i have for a time now, since you all seem very much more in the financial know-how than me: Since we have had Covid and now the energy crisis, most of the European Governments has been issuing gibs made possible by the the moneypress of the ECB. When the Chinese cough was around companies could apply for gibs and so could the poorest of our nation. Now, we have prices soaring of gas, groceries and much more and again gibs are given to various people in our society mostly the unfortunate. Nothing wrong with that ofcourse since we need to help those in trouble, but here is my question: Why do governments always go for gibs and thus pumping money in the economy instead of lowering taxes?. Never gets income tax lowered or tax on energy bills or food tax but every time billions get thrown into the economy and so accelerating the inflation increasing prices and making the euro worth even less.
We here in the Netherlands are taxed into oblivion at every step we take, somewhere along the line the state could obviously lower taxes in dire times but almost never do, lowering income tax would alleviate a lot of the troubles for everyone...why is that they always go for giving away sums of money in the form of subsidizes?.

Thanks for reading and even more thanks if you answer.

 

[Vecr]

Because (at least in theory) is facilitates partial wealth redistribution. Theoretically it should be from the upper and middle classes to the poor, but in practice quite a bit of it is transferred to "special" groups and politically favorable industry. In theory if no one escaped taxation at all and you had a progressive tax system (in brackets so you don't get cliffs) and you also gave a fixed sum to each person in your country, the poor would get more net money from the government because the middle class and rich would have to pay most of it back again in taxes. In reality where people do dodge at least some of their taxes in the higher brackets, the government has to make up the difference, so they issue bonds (essentially getting a loan) or decrease the interest rate or print money and that sort of thing instead.

 

[wtfNeedSignUp]

Why do governments always go for gibs and thus pumping money in the economy instead of lowering taxes

Because idiots think that gibs are a magic social righteous solution. It's the lack of economic knowledge drive by education skipping over unarguably one of the most important facets of the world, because the moment they start asking questions the entire thing will tumble down.

 

[Ultrapenguin]

Yeah, I don't think there's a real deep answer to it aside from "socialist tendencies". If they lowered taxes then you'd have economic power. If they take all your money and hand it out themselves, then they get to decide who has economic power.

If we lived in a perfect world that would mean distributing money in a way that will help the nation as a whole thrive, but the flaw is that those in power will always give first priority to staying in power and maintaining the status quo, so instead they take money from the most politically threatening demographics and redistribute it to their political cronies and pets, which weakens the nation but ensures their continued control and intra-national unity.

PS: that's a pretty cool seal

 

[One Guy Online]

Why do governments always go for gibs and thus pumping money in the economy instead of lowering taxes?

A very broad and quick answer that you're going to hear a lot of is the economic concept of marginal utility. To some degree this can make sense. If you give poor people gibs, they will either use whatever money saved by those gibs for useful things like food/rent/working off old debt/etc, or they'll use it on useless shit they don't need except for social media cred. Either way though, it's getting used and getting back to the economy and back to some company's bottom line.

Give that same gibs to someone better off, and they become more likely to do that godawful thing called saving and/or investing. While that's the obviously choice for anyone not in dire straits to do, it doesn't get the same immediate impact toward stimulating an economy as consooming does on a macro level.

Tax cuts will typically help more people in the second set of criteria of financial acumen than the first set of people mentioned, and therefore to keep an economy stimulated/propped up artificially, they'll go to gibs. From there, you can then direct gibs for whatever political purposes you need and have a "economic reason" to back that up.