Thursday, September 23, 2010

Tax Cuts for the Wealthy Will Fuel Economic Cesspool.

If the Bush tax cuts are extended, there is no doubt that more wealth concentration will occur.  At at time when a  growing percentage of our population faces economic hardship, can we really afford to let money, the life blood of our economy,  stagnate like water in a polluted cesspool?  

Because clearly, money at the top stays at the top, creating, if anything, burstable bubbles that can further destabilize our economic future.  It certainly doesn't  trickle down to create jobs, otherwise unemployment would have fallen, considering, currently, the money hoarders at the top - as more money than ever before is accumulating in the pockets of the rich - will continue to hoard.

Even if  "trickle-down" worked before (it did not - think Reagan's wealth redistribution towards the affluent), now that the wealthy have gone global and no longer limit their investments to America,  cutting their taxes is ludicrous.

This year  "the price of admission to the [Forbes] 400 is back up to the $1-billion mark" proving, once more, the rich are not investing in America.  The whole point of capital formation is to inject large amounts of money to increase flow, not to accumulate lots of it in a bank and short circuit economic flow.

Essentially we have transferred economic planning from government to the financial sector. Financial engineering creates an abundance of financial overhead - interest, dividends, fees, commissions, sky-high management salaries, bonuses, stock options, “capital” gains, etc. - that does nothing more than make money from money that doesn't even exist, thus draining, rather than creating value.

The casino games the financial sector plays reduces the value of our money.  If the rich truly believed in America, they would support taxation. 

Links:

The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review

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