There is a vocal debate occurring in our nation. We have met our “spending limit” as our nation owes as much as it makes in a year. I, and I think most rational people, are of the opinion that doomsday isn’t tomorrow, but that we should take actions today. I have an idea: let’s raise taxes on the super wealthy.
Who are the super wealthy, and what do they buy
I work in the alcohol industry. In the state of my position, Maryland, the state just raised taxes on alcohol from 6% to 9%. I said to my boss, “that 3% difference doesn’t seem like a lot, but that is millions of dollars leaving the economy.”
“Ha,” my boss said, “try like tens-of-millions.”
And he is more correct than me, that 3% tax is taking tens-of-millions out of the economy. So it bothered me that I was in support of taxing the super wealthy, but also opposed tax increases. Could there be a middle ground? I think there is.
The super wealthy, people who consistently make $1+ million per year, buy differently than you or me. They will spend, say, about $700,000 on goods and services, and save the rest. They are unlike you or me who save, say, about 10% of our income (because that is all we can afford.)
The super wealthy buy savings because they are affluent enough that they can afford to. The super wealthy are those who consistently make $1+ million per year.
Raising taxes on the super wealthy won’t slow the economy (enough for it to matter), and it is smart in the long run
For the sake of argument, assume the following logic. We raise taxes on the super wealthy. They will spend less (of course) but they especially won’t continue to save as much as they did either. Offer evidence to the contrary, but consumers across all income spans prefer to preserve their spending habits for pride, for children, for comfort, for as long as they can.
I am a Keynesian. I believe in my-heart-of-hearts in credit, CDS’s, and central banks, but even I can recognise that too much debt is a detriment to an economy. If we reduce our debt over the long term, it will help to create a healthy economy over the long term.
I am reminded a lot of Jon Stewart’s Rally for Sanity. I, and I think most people, are the 80% majority who aren’t heard. I, and I think many others, look at our national debt challenge simply. We look at it and ask, “Why can’t we battle this challenge from both the cost and revenue side?” And I think that is the correct and rational position to have on this debate.
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