Friday, May 23, 2003

Why taxes for the rich won't help the economy.

Rich people get rich by making a lot of money and by not spending it. From my personal experience, rich people are far cheaper than people who are not as well off (tipping, donating to charities - at least on a percentage of income basis). Instead of spending their money, the wealthy invest it, which generates additional income for themselves. While investing the money, usually in the stock market, does put the money back into the economy, for the most part it is going to benefit the already wealthy corporate executive. As more wealthy people buy stock sending stock prices higher, you know damn well that the executives of those companies are going to give themselves raises and bonuses (while yes, a few jobs might get created). And with those bonuses they will save and invest most of it, but maybe also buy a second or third home and new SUV.

One alternative to just giving greedy rich people more money to play with, would be for the government to be more involved in direct investment in helping to create new business. Bush goes on and on about the small business, but his policies are aimed at small, but already very successful businesses. Why not give low interest loans to people, with maybe the first 5,000 forgiven, to get people started with their own business. Wealthy people are not the only ones with good ideas for new businesses, but they are the ones who can afford to get one going. Sure a lot of stupid dotcoms got funding, but a lot of those people already had money to fall back on if (and when) their stupid ideas failed. For the majority of people who get though college and are then stuck with student loans, the idea of trying to get another loan is laughable. But if the federal government put that $350 billion into a loan program to start new business, while certainly not all of it would end up creating successful businesses, all of it would be spent, and put directly back into the economy.

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