I hear on Meet the Press today, Greenspan saying that increasing taxes depresses the economy more than reducing spending. Of course both do. This is but one example where using the phrase, Increase Taxes or Decrease Taxes WITHOUT being specific on which segment of the population or what is being taxed, misleads the listener - usually intentionally by the speaker.
Lets be clear. Increasing tax revenue on the income or assets of the wealthy would not depress the economy and in fact it would stimulate it. All but a very few in the group would in fact approve of their being taxed more. They understand the moral and ethical obligation to do their fare share in running the government of the country that made it possible for them to become wealthy. The few dollars they would pay would hardly be noticed by them. Collecting more from the wealthy would be viewed positively in economic circles world wide as it is the single most effective way to bring the deficit under control and as it would demonstrate a commitment to stand by our national values of fairness and integrity. By not putting the burden on the middle and lower classes it would be stimulative and at the same time the increased revenue to the treasury would reduce the need to borrow.
However a broad based tax increase, at this time, would add a depressing effect on the economy as the middle and lower classes would spend even less. Their spending is the driver of the economy.
An obvious fact once one thinks about it is that giving money to the wealthy must reduce economic activity. That money is not spent, instead goes into stocks or funds or cash. Much excess money today goes into Chinese or other foreign company stocks That does not create a single job. There are about 3 Trillion Dollars (by most estimates) of cash sitting around in private and corporate accounts looking for some place to be put to work. To add to this pool does not employ a single person
A frequently heard argument is that if business had confidence in the government and its management of fiscal matters, then they would expand and increase the need for employees. There may be a bit of truth to this but only to the extent that a company must have confidence in a projected increased demand before they would do that. Right now, demand is not there. That is not because of political nonsense in DC but because people don't have the money to spend. Many companies are not running at capacity and until they are they are not going to build more plants or increase the number of employees.
However, restoring the tax rates (at least on the wealthy) to where they were when Clinton was President, would generate the funds to drive infrastructure repair work which is desperately needed and would be very stimulative to the economy. Outside of that small group of about 400 people and the small group of Republicans they put into congress, there is very little objection to doing just that.
