- Rising income is subject to taxes, which would reduce the real income, whereas a financial gain or savings as a result of freezing, reducing or eliminating recurring cost would be tax-free.
- A financial gain achieved from cost reduction is definitely better and yields a higher gain than the same gain realized by rising income. The long-term effect of the cost reduction is greater and more permanent than gains achieved by rising income.
- Rising income seldom leads to accumulation of wealth in the long-term, but reducing cost means saving and accumulation of wealth assuming the income continues to exist.
- Rising income/revenue cannot offset rising cost because the cost keeps rising uninterruptedly, whereas the continuation of the rising income/revenue could be and eventually will be disrupted or even brought to a permanent halt.
- A reduction in cost is equivalent to increased income/revenue without being taxed.
Summarizing the above means that an economy is much more preferable and beneficial in the long-run if we could reduce the general cost, especially the permanently recurring cost, and keep a fair level of continuous income flowing towards us, as opposed to a condition where the cost keep rising permanently, and the rise of income is just limited to certain favorable economic condition, which eventually ends or shrinks due to unemployment or retirement.
WHAT TYPES OF COSTS MUST BE REDUCED PERMANENTLY?
There are three most critical sources of costs that must be brought under strong control if we as private households, governments and businesses want to survive and prosper as well as enjoy economic security in a recession-free economy. These three main sources of cost are:
2) Interest, and