How exactly do you think the bank earns the interest it must pay on that $100? It lends the money to people who then spend it in expectation of a profitable return. This is just as good as the rich person directly spending the money.
A peculiar stance for a union guy, to be so trusting in the largesse of the rich.
Starving Artist To switch to the other side, there are also economies of scale that benefit the wealthy disproportionately. It’s easier to make more money if you already have money, so the straight percentage viewpoint of it all is a little naive. Rich people become rich by paying you as little as possible to work for them so that they can profit. They are making money off of YOUR labor, not off of their own.
Except poor people have far less influence on politics than rich people do. Also, I’m pretty sure that taxes don’t take half of anyone’s paycheck, let alone that of someone making <$50k per year.
Edit: re: Starving Artist’s usual nonsense.
Not to mention that your average multi-millionaire spends more in a year than most of those poor people make in a year. I doubt many highly wealthy people have much of their money in savings accounts. And if it IS in a savings account then it’s intended for spending because that means they are keeping it there to maintain liquidity. If they didn’t intend to spend it, it’d be put into one of their funds and as such would be an investment.
You have to count things like traffic tickets, tolls, gasoline taxes and sales tax as taxes. If you added up all the hidden taxes I am pretty certain your average person pays about half of their income in taxes.
What people don’t seem to grasp or often discuss is that our system as it exists is the reason these people have their money to begin with.
I do think that this comment is a good example of how there is a fundamental difference in how liberals and conservatives think about social mobility. Liberals tend to think that poor people are victims of their circumstances and that poor people will always be poor unless the government steps in to save them or something random and miraculous like winning the lottery occurs. They tend to think that rich people were either born into it or lucked into it due to their privileges in life.
On the other hand, conservatives actually do believe that if you are willing to work hard enough that you can improve your station in life and that becoming a millionaire actually could happen because you opened a successful business, worked hard in school, saved up some money and then invested wisely.
I suspect that whether you see wealth as a random accident that some people get through good fortune of birth or whether it’s the resort of good decisions and hard work has a lot to do with how much you feel rich people are entitled to keep their money.
Another issue of course is that whole thing about rich people being the ones who hire poor people. Someone wealthy won’t necessarily just sit there and hand their money over to the government. They might very well move their finances over to a country that has policies friendlier to the rich (I would suspect that India and China are probably places which would be very receptive to wealthy foreign investors right now). You don’t have to be rich to think that chasing all the wealth out of the country could end up hurting even poor people.
Actually, they are making money by PAYING ME FOR MY LABOR so that they can profit. Nothing wrong with that. (And the less they pay me, the less they can charge for their product and the more people who can afford to buy it, so those people and the economy benefit from that.) Then, to the degree I can make myself more valuable to my employer, or to the degree I can obtain money so as to hire and pay others whose labor I profit from, I reap greater financial benefit than I would otherwise.
And at this point I feel compelled to point out once again that the nation’s money supply is not finite. It’s a fallacy that the rich get richer and the poor get poorer. If you increase your value in the market place you will get ‘richer’, and if you don’t and you get passed by or fired, then your value to the marketplace diminishes and you make less. I will not earn one dollar less in my lifetime because Bill Gates, et al. have billions, and I would not earn one dollar more if they turned it all over to Uncle Sam. If you increase your value to the marketplace, you will make more money no matter how poor you are…and if your value to the marketplace diminishes you will get ‘poorer.’ It has nothing to do with rich people hoarding most of the available money.
Here’s an illustration. Let’s say that it costs $900/month for a family to live. Rent, food, clothes, water, electricity – just the necessities. Let’s say a family brings in $1000/month and is taxed at 10%. That leaves them exactly the amount of money they need to live. Now let’s say a rich person makes $100,000/month. His tax burden at 10% would be $10,000, leaving him with $90,000/month. That’s certainly more than enough to live on.
In addition to just living, the rich person can live in a nicer area, eat better food, enjoy entertainments, and take advantage of opportunities that require an investment. A poor person who has no extra cash cannot reasonably be expected to invest in his future. (For example, it costs hundreds or thousands of dollars per Quarter to go to school.) Thus a poor person cannot easily make himself more of an asset to society or the economy, while a rich person still maintains a high standard of living.
It’s just simple math. A percentage of a large number is greater than the same percentage of a small number.
EDIT: Or, what mswas said.
That was my point.
As to the rest of your post, yes, it’s obvious that people with money live better. The problem comes when a confiscatory governement, eager to buy votes with social programs, becomes the one to decide just how much a rich person “owes” as a result of his greater income. And it’s a great deal more than 10% and is growing all the time.
Plus, like I said the defintion of ‘rich,’ and therefore the pool of people getting taxed disproportionately, keeps getting lowered. So a lot of people are paying more than they would otherwise if not for the fact that they government has declared them rich when in reality they are middle middle-class at best.
That’s not how it works though. They will charge as much as they can for the product. If there is no incentive to raise your wage or lower the price they won’t, they’ll pocket the difference. In fact the executives of your company are legally obligated to keep your wage as low as they possibly can because their first and only loyalty is to the shareholders.
Yes it is a fallacy that the rich get richer and hte poor get poorer. There is a baseline for being poor that cannot be lower. If you are in a famine you are in a famine and that’s as bad as it can get. You might not get more money from them turning their money to Uncle Sam but it’s possible you’d get a service you wouldn’t otherwise, thus allowing you to benefit from the economies of scale that the wealthy can benefit from.
To my mind it’s not either/or but about finding the golden ratio. Joe the Plumber is not a total idiot for thinking that the rich will invest the money they save on taxes, of course they will, they absolutely will without a doubt. The contrary opinion has no merit whatsoever. But what’s at issue is whether or not basic services are being provided appropriately by the market. If they are not, as they are not in the case of insurance the government has to do something.
The rich are rich BECAUSE of the government, not in spite of it.
This is kind of a side issue, but… if wealth or the lack thereof is truly merit-based, why does a certain sector of society always bitch about estate taxes? Why should you get money that your parents earned? Get your own damn job.
What, then, would you call the phenomenon predominately experienced with Republicans in the White House wherein the top 1% holds more of the nation’s wealth, and the bottom 30% holds less? Note that I am talking about their shares increasing, not the size of their shares in the first place.
Starving Artist, you’re aware that taxes have been steadily decreasing for the past thirty years, right? The top bracket under Eisenhower was taxed at 91%.
The rich got a lot richer and the poor got moderately wealthier.
Put it like this. Say I am rich and you are poor.
I had $ 1,000,000, then ten years later I have 10,000,000.
Inflation goes up by 10%.
You have 25,000 and then ten years later you have $ 30,000. Your Purchasing Power Parity exceeds what it was ten years previously by 10% while mine exceeds it by almost 900%. Yes, the income disparity gap is larger than it was ten years ago, but that does not by any means indicate that you got poorer, only that you didn’t become wealthier at the same rate that I did.
We often look at inflation but I don’t think many people look that deeply into PPP. Yes, a can of coke is more expensive, but a DVD player is less expensive than a VCR used to be. I don’t remember VCRs becoming cheaper than 50 until DVD players started to replace them, whereas DVD players hit 50 before Blu-Ray was even on our radar.
It’s a holdover from perceiving one’s identity through the clan as opposed to through the individual. Our modern notion of an individual and what they are due is relatively recent.
You’re conflating Clinton and George W. Bush. Clinton raised taxes on the rich; Bush cut them.
During Clinton’s two terms, the U.S. averaged a 2.6% and then a 2.3% increase in the number of jobs; Bush averaged +0.002% in his first term and +0.3% in his second term. During Clinton’s entire presidency, real median income increased at an average annual rate of 2.05%; Bush’s two terms produced an average annual decrease in real median income of 0.06%; and as the chart shows, this wasn’t just a case of Bush getting clobbered by the big recession at the end of his presidency and having that drag down the average for the whole eight years: growth in real median income was pretty much flat the whole time he was in office, in contrast to old tax-and-spend Slick Willie, whose presidency shows a clear trend of rising median income.
NOTE: I’m well aware my cites are to a Wikipedia article and a blogger. If someone else has better information, fire away.
How can that be since I made no commentary about the President cutting taxes or not?
Was the raising of taxes actually causal there? George HW Bush’s policies would likely be more to the credit of Clinton’s first term economic growth just as the current economy should be laid at W’s door. And yes, I know he raised taxes.
It’s all good. I get your point, but I am not attached to lower taxes creating jobs, I am just saying that it’s naive to believe that the rich just squirrel the money away under their mattress and that it doesn’t perform. That’s simply not the case. I can’t really say anything about the effect of taxes on job growth in any meaningful way because I don’t really understand it, but it seems to me that tax policy doesn’t have as direct an impact in either direction as most people seem to think. You want to find a ratio in between too much taxes putting a burden on everyone and too few taxes making it impossible for the government to pay for the services it provides.
You were commenting on “trickle-down economics”:
Thread title: Why do the world’s Joe the Plumbers think tax cuts for the rich benefit them?
The whole point of trickle-down economics is “Cut taxes on the rich because if we let them keep more of their money they’ll invest it and it will result in greater economic growth which will benefit everyone”. Based on the evidence of Clinton’s numbers vs. Bush’s numbers, it doesn’t appear to work that way.
Fair enough.
Au contraire! The money in that account is then used by even richer people to invest in even more lucrative financial devices, thereby allowing more pouty adolescent daughters to acquire even more ponies. You know, the “trickle-up” theory.
But let’s be honest, there *is *some benefit to the pony-shit-shoveling sector of the economy. They don’t get paid much, but often get invited in to the manor for afternoon lemonade and a good ass-fucking of the supremely-bored lady of the house.