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Doesn't economic productivity increase when you cut taxes in general? This statement while not untrue is misleading.
Why would it effect productivity at all?
Productivity is real output per man-hr. The primary thing that effects productivity is investment in tech, infrastructure, and education. Since the rich are sitting on cash, and demand is low because of 4 decades of depressed wages and escalating consumer debt, giving income tax cuts to the rich would have no beneficial effect at all. Likely it facilitate a greater capital drain.
Why in heaven's name should this be a surprise to anyone? It's common sense. When poor people get their hands on money they spend it ... on the many needs that have accumulated in their lives since the last time they had spendable cash. Shoes for the kids, repairs on the car, home improvements, paying off long-owed bills, trips to the dentist, eyeglasses they've needed for a long time.
Having been a low-income person the majority of my life (artist), I know how people who live below the income-median operate. The vast majority have strict budgets that are parceled out to cover the things they absolutely need to function week-to-week: housing, transportation, food, things for their children. Things that can be put off for a month or a year never get purchased. Healthcare, insurance policies, and savings for retirement are the first to be ignored in the necessity to keep their heads above water as prices go up faster than their wages. So when these people have any kind of windfall, it gets spent in a matter of days. It does not go into a savings account.
And that benefits the economy. The economy benefits when the minimum wage is increased. The economy benefits when people are allowed to get the unemployment insurance they and their employers paid into throughout the life of their job ... which is often cut short by governments who say they can't "afford" to keep people on unemployment. The economy even benefits when people get food assistance. The government distributes the food stamps, people use them immediately, and the money is circulated. It doesn't go to the Pentagon so they can build another bomb.
When people living far above the median get extra cash, however, it DOES go into a savings account, a retirement plan, for stock purchases, etc. The only ones who benefit are financial institutions. That's one of the things that angers me so much about many of the 1%. They not only set aside much of their money so it has no positive impact on the economy ... they often put it in overseas accounts or handle it in other manipulative ways so it can't even be TAXED. Even if they donate to charity, they get a tax deduction for that. Yet they call themselves patriotic and say poor people need to plan better and work harder.
So you reject the evidence that special interest lobbying affects tax law? That flies in the face of reality.
Hahahha! What evidence was that again? Tax writers are of course lobbied from all sides, but more to the point, tax laws only rarely get changed in response to anything at all. Congress spends a lot of time figuring out the expenditure side of things and comparatively very little time thinking about the revenue side. People who pay attention are actually apt to recognize these things.
Last edited by Major Barbara; 05-16-2015 at 03:09 PM..
Since you know better than everyone else, I suggest you contact the NBER and the Fed and explain it to them. I'm sure they've ever thought of looking into the areas you suggest.
Yeah well, I'm sorry you made such an over-the-top claim without spending the 30 seconds on Google that it would have taken to learn how entirely wrong you were. Maybe do a better job of fact-checking yourself in the future.
They not only set aside much of their money so it has no positive impact on the economy ... they often put it in overseas accounts or handle it in other manipulative ways so it can't even be TAXED.
Good post, but it's important to understand why consumer capitalism works (usually) in the first place. The rich are the "investor class". That role is just as vital as spending. You actually need a balance between the two, else there will be problems.
For the last 40 years our policies have encouraged the rich to extract profits from our economy and invest them elsewhere. Now that all the debt bubbles have popped that kept consumer spending boosted for 40 years, we are left with the result.
The rich are the "investor class". That role is just as vital as spending.
Yes, a flow of savings and investment is important in assuring a healthy economy. But a thousand investments of $1,000 are just as effective as one investment of $1,000,000. There do not need to be extreme concentrations of wealth in order for savings and investment to occur.
Low income family tend to buy more when they get a little extra income. They live paycheck by paycheck. When they see a larger paycheck, they tend to spend it.
Low income family tend to buy more when they get a little extra income. They live paycheck by paycheck. When they see a larger paycheck, they tend to spend it.
Which explains all the different kinds of sales in April around the time most families their income tax return.
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