Thursday, August 25, 2011

Tax the Rich: The Grand Economic Fallacy

There's a fundamental economic fallacy posited by the Obama administration and certain other politico pundits and many Democrats that is plain idiocy.  It's that taxing the rich solves our economic woes.

There's a discussion going on HERE at LinkedIn that finally makes plain how stupid this is. My contribution, albeit simple by comparison, was this:
That the rich horde money, at least in the United States, is a gross fallacy. I wish someone would do a simple study and list where the rich put their money when they make it. Here's a short list, and please note that everything on this list, benefits the "working" class (as if the rich are not working...another fallacy) and benefits the government when the tax the working class income. (1) the rich build large houses (they hire construction teams and materials. (2) the rich buy material goods (the working class designs, manufactures, transports, sells, delivers, installs, and maintains those goods). (3) the rich invest their extra money in corporate stocks and government bonds (all which allow companies to invent, design, build, sell, distribute goods -- every step of which employes the working class). (4) the rich leave a small portion of their income in bank accounts (which the banks use to pay their employees, and invest in corporate and government bonds, which, likewise go to employ people and get taxed as income. the rich do not horde their money. They spend and invest it. And every dollar that is spent or invested employs and gets taxed. Bingo! You have economy expansion.
Michael D. Greaney, CPA, MBA, (Director, ESOP Admin Svcs, Equity Expansion International, Inc.) post says it even better at the above link.

Please pass this on. We really need to kill this silliness that the rich are somehow evil for knowing how to generate wealth. Oh, that the poor would learn the the same techniques. It has little to do with repression and everything to do with freedom.

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