Due to misunderstanding about economics mechanism by policy makers, large number of people are being compelled to suffer for subsistence life even doing hard work either poor country or developed country as well. Technologies are being used to increase productivity but maximum benefits of increasing productivity is being gone to 1% people and most of low level workers should take loan from bank, those loans have been dispatched by banks by taking deposit money from same 1% people. It is a worst situation for human society on the basis of economic inequality. Every country is facing this kind of problem around the world but nobody has given some good ideas to minimize this problem.
By holding huge money by 1% people, market is being suffered by less demand and factories are not being run full capacity that’s why unemployment problem is raising, economic growth rate is not increasing and poverty is still existed around the world even we have enough technology and resources. Do you have any doubt that we are compelled to suffer this situation by applying wrong macroeconomics policy? Of course not. This situation only can be existed due to misunderstood about profit. Due to profit maximization on short period, 1% people have abled to gather and capture huge money by that reason rest of the people or most of low-level workers are compelled to suffer for subsistence life even they have been working hard even developed countries.
Before inventing any kind of new solution, we should know very well knowledge about the problem and related matters as well. So we should understand first about what is profit. Profit is the positive amount of difference between revenue minus cost. Profit is the main motivation factor that attracts people to do any kind of business and investment. Profit is the source of reinvestment on business and creation of innovation as well. Profit drives the economic growth by reinvesting and creating new jobs. By creating innovation using profit that plays role to increase productivity. So that profit is the very good and main factor of economic activities but the same time profit crates a lot problem in the economy that I already mentioned in the beginning.
In economics, goods and services are called by products. Money is price of all products. To produced any kind of product money must be used to distribute the total income to the participants, who are involved in economic activities like labor, landholder, investor, government etc. By involving on those economic activities few percentages of people have abled to gather huge money through profit. We already knew that money is price of products then if few people are taking huge money through profit then rest of people must take loan to buy those products that’s why most of people should pay large part of their monthly salary around 30 years loan instalments even developed country. This situation only possible to happen due to huge money goes to few people through profit and life of rest people are suffering to buy necessary products. Due to holding huge money by few people, market is suffered by less demand, resources are not being used, factories are not being run with full capacity, people are being jobless, economy is suffered by low growth rate. By that all above reasons economy is in trapped and jammed that’s why large number of people must be suffering to buy products from market.
How to solve this economic trapped and jammed situation this is the main concern of current economy affairs. If salary of workers has increased then price of products would have increased even problem would remain same. So progressive tax policy must be applied upon maximum profit in a year. Money is price of product, in price there are three part in price one is cost another is tax and rest of profit. If few people are taking large profit from selling price then finally it triggers the inequality and so many problem in economy that’s why profit tax can be applied in the basis of ratio of Profit / Sale. By applying this tax policy on profit, increasing sales always motivated but taking big profit through less selling quantities always demotivated. After applying this policy any kind of monopoly market will be ended from the economy because increasing profit sales ratio would apply the high profit tax rate. All businessman compels to sell their products on low price after that so many people can buy products from market. Market never will suffer by less demand. Because if some businesses getting high profit from sales then government will take huge amount from profit tax and expend for public products those money immediately goes to the publics and publics creates the demand. After increasing demand finally all participants including investors would get more benefited than current trapped situation. There are not need any competitors to minimize price of products by applying this tax policy, investor automatically willing to increase sale but not profit ratio of selling price. Because if profit, sale ratio increases then profit tax percentage will increase that’s why all current economy problem will be solved forever.
For example, one businessman getting profit 100000 by selling 500000. First we should calculate profit sales percentage 100000/500000*100=20%. Then can make tax policy if profit sales ratio is 0 to 5% then profit tax would be applied 25% on all profit, if ratio is 6% then 27%, 7% to 29% 8to 31% 9 to 33% 10% to 35% and so on. Here above example, there is 20% of profit of sales that’s why we should applied 55% profit tax rate on 100000 profit. Because getting maximum profit from less sales quantities creates the problem in economy that’s why we always should motivate increase sale by making low sale price. At beginning it seems uncomfortable to investors but finally all participators get benefited because this policy increases the demand and decrease the price even there is monopoly in somewhere. Nobody can get large profit through less selling. If this situation come economy never suffer by any kind of jammed and trapped situation and poverty will be easily ended because high demand brings a lot jobs and products also can buy at low price even there is monopoly market. By applying this policy businessman motivates to increase by increasing sales quantities but they demotivate to increase price of products that situation always control unnecessary inflation and market would run getting at minimum profit level. I just give examples about percentages according to business type we can change percentage. My main aim is that nobody can able to loot in the name of profit from market even market is not competitive.
We can make percentage like this way if P/S Ratio is up to 3% then whole profit tax would be applied at 15%, if P/S Ratio upto 6 % then profit tax would be applied at 25% if P/S Ratio up to 10% then profit tax would be applied at 35% . By applying this kind of tax policy, businesses get more benefited by increasing sale quantities rather than increasing price.
Happy New Year 2078 to all people around the world from originally Nepal currently Finland.
I kindly request to all economists to think about my innovative ideas about tax policy on the basis of profit/sales ratio. I have created this idea by thinking deeply in my current lay off period by observing real problem of macroeconomics around the world.
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