It’s rare to find reason to praise Newsweek Magazine. But in the July 20 issue, they revealed a little something about the high cost of taking too much from the rich.
Quote: “Trickle-down economics is a despised phrase and concept to many, but it also embodies a harsh reality.” (Note the word: reality.) Continuing: “The rich often play a pivotal role in U.S. economic growth, and if they are enfeebled, then the consequences are widespread.”
The trouble with slowing the engine of the train is that the caboose slows down too; it doesn’t get anywhere faster. The problem with Obama’s plan to send all the bills for his every scheme to the rich is all the collateral damage.
Summarizing from the Newsweek article:
Households with more than $200,000 in income corral only 3.4 percent of all income but do 14 percent of the consumer spending, the only real force that creates and sustains jobs. What I’d point out is, if put upon, it is infinitely easier for us rich folks to cut back our spending by half than it is for low income earners to cut their spending at all. The lower on the income ladder, the higher the percentage of income is spent on necessities. The higher the income, the more discretionary spending and flexible spending choices. If the $200,000+ earners cut their spending by half, and contribute only 7 percent of all consumer spending instead of 14 percent, what then? Well, yes we can. And don’t kid yourself, we already are.
Next from Newsweek: the rich also pay most of the taxes. In 2006 – the last year for which complete data is accessible – the richest 1 percent paid 28 percent of all federal taxes, the richest 10 percent paid 55 percent. Might I point out, should the rich decide they are being ruthlessly and unjustly targeted and take twice as much time off and cut their incomes intentionally by 10 percent or 20 percent for a few years, the federal government will find itself starved of incoming tax revenue. As a result, tax increases on everybody else – notably the middle class, who have no such choices – will multiply fast and furiously.