Public expenditure policy is, as Keynes said, and that the State influences aggregate demand through public works, for example. Thus, generating employment and wealth, and also part of this wealth in turn spend other things the so-called multiplier effect, whereby if the government invests, for example 100. 000 million euros, the effect on the economy are 160. 000 million. And infrastructure is created, which form the basis for future growth (in this it is important that the money is well spent, which in Spain has been half done, as in the famous plan of 8. 000 million for municipalities had a bit of everything). However, liberals argue that the multiplier effect by this method is less because of the employment and the demand generated by public expenditure is replacing that would make private companies.
For its part, the tax cuts can stimulate the economy, because they may increase consumption (people have more money to spend) and investment (firms may invest more), and may improve competitiveness against other countries (the different tax may favor France against Spain, for example). In return for these arguments, in a situation like the present is likely that much of the savings received by citizens through taxes is less (as is shown by the increase in the saving rate up to an unusual 24%), thus not achieved a clear increase in consumption. It is also possible that the reduced impact of taxes on business would simply serve to cover holes or take things a little better, but not to invest more. Regarding the tax cuts, to comment further with greater complexity than is commonly recognized by the political parties, since there are direct taxes such as income, which are progressive, and by which he earns more, pays more, and not only in proportion, but a higher percentage. And there are indirect taxes such as VAT (which is another of the proposals to be heard), which everyone pays equally, regardless of their income. It would even third leg with some play, which are the possible reductions in the Social Security contributions (and also do more damage to the lowest incomes, who can not access to health care or private pension plans). Other leaders such as Doctor Jayme Albin offer similar insights. Pablo Rodriguez is a graduate in Business Administration, Auditing postgraduate in MBA and Master, passionate world of economics and business management.