Sounds OK, Doesn't Work

This might be the most cogent description of liberal tax policy that I've read. He actually makes reasoned arguments without once referring to Bush as Hitler or calling him a Chimp, so he's got a leg up on the Kooks right there. Too bad he's wrong.

Always remember, all jobs in the economy owe their existence to the spending of others (consumers, businesses, or the government).

This is something he nailed. He's right on with this. But, you have to put this statement in the context in which he put it to see the error of his comments, as follows.

you need to raise taxes if you want to stimulate the economy, not cut them. How can this be true? It’s very simple, actually. It all depends on whose taxes you are raising/lowering.

If you raise the income tax rates of rich people, the predictable result is an increase in aggregate spending, greater economic growth, and lower unemployment. This is because such a tax hike ultimately takes money that would have been saved [by rich people] and spends it, instead. That creates jobs. Always remember, all jobs in the economy owe their existence to the spending of others (consumers, businesses, or the government).

And there's the rub. I don't know who 'predicts' this, but I wouldn't hire them as a fortune teller. This is not true on any level.

If you mean the super rich, they can't spend their money fast enough to get rid of it all. But they damn sure TRY. These people tend to have very low risk investments, which means low gains and virtually no taxes. so the fortunes don't grow very fast. It is the sheer size of the fortunes that prevents them from dwindling. Paris Hilton is a good example of this; she comes from a super-rich family, and spends money like a Democratic Congress.

What about the Nouveau Riche? Those with massive new fortunes gained from the tech boom, or rock stars and movie stars, or others like them who find themselves rich suddenly. As soon as these folks get their money protected from taxes and risk, they spend what they can at alarming rates. See Oprah Winfrey and P.Diddy.

The only other group of rich people are the working rich, the ones who daily shoulder the burden for their families, the ones who invest their money in higher-risk funds and securities to build portfolios. THESE are the people who get taxed, THESE are the people affected by tax increases, THESE are the people affected by capital gains taxes, THESE are the people that will carry the burden for the poor as a result of tax increases.

Make sense? The first two groups insulate all of the money that they are able to insulate from taxes and risk... in proportion to fortune size, they pay very little in taxes. They invest in Treasury Notes and Municipal Bonds, which yield little but carry little tax burden for the investor. The last group don't have large fortunes, but they are working towards it. They make good money, they invest some of it in stocks and mutual funds, because they are willing to risk some money to make more. These investments generate taxes on capital gains. The last group invests in their own businesses, they invest in other businesses, which helps to create jobs. Taking money away from the this group, in the form of higher taxes, stifles job creation and business development, which leads to job losses. Make sense now?

More lunacy:

The only reason why we ever have any level of unemployment in the economy is because too much saving is taking place. The only reason why recessions ever occur is because there is a decrease in spending. Sales drop. People are laid off. Why does spending drop? Because some people—-who have a choice to either spend or save their money—-decide to not spend (i.e., save).

If your country has an unemployment problem, it can be eliminated by increasing the amount of taxes that are collected from the wealthiest members of society. This is because large amounts of the money that they would be handing over to the government would have been saved by them otherwise. When you take money that would have been saved and spend it, it causes an increase in sales and that leads directly to more hiring by businesses.

This is absurd... If this works, how do you explain the entire continent of Europe? These countries pay large amounts of taxes, these countries pursue socialized government entitlement, these countries have RIDICULOUS amounts of unemployment. So don't say higher taxes lead to higher employment, because it never pans out. See this article for a brief overview of European problems. The following quote jumped off the page, in regards to solving the European problem, but the entire piece is good.

Reducing the cost of employing workers by cutting payroll taxes and government mandates on business -- such as paid family leave and long vacations.

Cutting taxes and public spending and reducing interest rates.

Hmmmm... good stuff.

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