Anyone with a functioning brain and the ability look at the figures will realize that tax increases are NECESSARY to cut the deficit. No amount of
spending cuts would solve the budget deficit issue on its own.
Does that mean everyone's taxes will have to go up? Of course not! Selective tax increases are enough, and they should be done in a way that doesn't
harm economic growth or the overall wellbeing of the majority of US citizens.
Someone earning $30k per year will spend pretty much all of it, creating jobs in the process. Why? Because life is expensive and if you make little,
you will have to use most of it to live, to buy food, to buy gas, to pay for school, to go on vacation, to buy that new car, and so on.
Someone earning $1m will spend some of it, and if he's got a brain (which is often a given if he made $1m in the first place) he will invest
whatever's left over. Generally, that share of "left over" money to invest is higher than that of a "poor" person. So that "rich" fellow is
going to invest his money. And of course now people will say "see, he's going to invest and stimulate the US economy".
If you invest money, and you're not an idiot, you invest it where returns are greatest. Since the housing crash, that's not real estate. It's also
not the stock market, because if you look at the Dow Jones for example, and invested money in 2000, on average, you lost money by 2011. That's taking
the average index of course, some people still make money of stocks in the US.
Dow Jones graph for those who care
So what are rich people investing in?
1) FOREX: Buffet does it, Jim Rogers does it, everyone and his dog does it. When investing in forex you don't really care much if the market goes up
or down, you just long or short. Possible in stocks too of course, but it's easier and more direct in forex...the markets are also more liquid. In
both cases though, it's not really stimulating the economy all that much.
2) Gold: If you had invested in gold 10 years ago, you would have joined an average yearly return of around 20%!! Far far far faaaar above bonds and
most stocks. Does buying gold stimulate the economy? Not really in a way that generates jobs...
3) Oil: Wars in oil producing regions + more people buying plastic (iPods, etc.) = price of oil goes up. Pretty good investment...does investing in
oil create jobs? A handfull, at offshore oil rigs...not enough to claim it's "stimulating the economy".
And then there's the problem of the disconnect between Main Street and Wall Street. Investing in stocks doesn't necessarily result in a better
economy with more sustainable consumption. Sure, you can boost stuff temporarily...until the world wakes up and realizes it's all vapour. That's
what happened in the recent crash. And short term thinking like that gets us in trouble...
The point is, the "rich" use the money they save from paying not more taxes in ways that doesn't necessarily boost the economy. Hiring Lopez from
Mexico to cut your lawn once a week isn't "creating jobs" or "boosting the economy"...and neither is buying that $15m ring which was made in
Paris and brought over in a leather suitcase by an English guy wearing a suit.
Of course some invest their money in ways that boost the economy, but they're not in the majority. And it's clear that rich people shouldn't be
taxed to hell and back "just because they're rich". But no one could argue against a 2-3% increase for people earning over $10m per year.
Or companies being allowed to ship jobs off-shore, or fire people outright while getting massive tax subsidies. Or other tax evasion methods. If they
do business here, and want the benefits that come with it, they should pay their fair share without "deferring taxes because of losses incurred
Those 2 things alone wouldn't hurt 95% of Americans, and wouldn't kill the remaining 5%. Of course companies' goal is to make profit, as much
profit as possible. They are not "moral entities" if you want. So they will spend a TON on making sure those tax hikes won't happen for them.
They do that through people like the Koch brothers. By creating entire media campaigns aimed at convincing the people that as soon as someone mentions
tax hikes, even if they are inevitably necessary, they believe THEY will have to pay more taxes...the average Joe. Look at who funds the parties who
influence you! BIG BUSINESS!
Tax hikes will happen, because they are necessary to fix the deficit. Spending cuts alone won't "cut it". But they can be done in a sensible
way...or more like "could". Because cutting money from the poor and middle class, the classes who spend most of their money on real stuff that
stimulates the US economy, is pretty much shooting the economy while it's down.