More disposable income, more commerce. Do you spend more shopping when things are on sale or when paying list price? Every time money changes hands at multilevel government gets a piece of it from manufacturing, shipment, storage, resale, point of sale. The more money changes hands the more government gets in the end. You want to slow down exchange, raise the cost of it. Commerce equals jobs. No getting around that.
Tax cuts to the working poor are not significant enough to boost the economy. The poor make so little money and therefore pay so little taxes. No refund will be significant enough to truly create the demand that is now needed.
Tax cut to the wealthy are not much better. Bill Gates doesn't need a tax break to by an iPad. And he's not going to add jobs because there is no demand to capture. Since the 70s wages have been decreasing, i.e., the middle class no longer makes enough money to meet the consumption demands of our economy. We tried giving them unsecured credit (Master Cards and Visas), as well as ludicrous mortgages, but we broke the bank. You can't loan money into a class whose wages and benefits are disappearing.
Everyone knows the wealthy pay the lowest taxes. They make the lion's share of their earnings in stocks, which are taxed at 15%. This low rate was designed to spur investment in the real economy, but it has merely contributed to the speculative Wall Street casino.
Where did the Bush tax cuts go? Did they go to desperately need infrastructure? -to New Orleans levees or Minnesota bridges or Northeast energy grids? Nope. They went to derivatives and CDO's and CDS's and oil futures and any number of toxic hedge funds. Meanwhile, the middle class -- having been strangled by Reaganonimc's obsession with lower labor costs -- has lost the necessary buying power to drive the real economy.
Here is what the Reagan Revolution never understood. The middle class is too big to fail. The moment movement conservatism repealed the legislation designed to protect the solvency of the middle class, they created a structural flaw in demand. They promised that by giving the richest Americans bigger and bigger tax cuts, the middle class would realize a cornucopia of solid jobs & benefits. Nope. Ever since they made the promise, the jobs have been steadily flowing over seas, and benefits have shrunk. The old job model included health care, retirement, profit sharing, and cost-of-living increases; the new job model is a low wage, benefitless temp job. This formula made the rich wealthier beyond their wildest dreams, but it destroyed demand. Silly rabbit. The whole point of the Reagan Revolution was to give the owners of capital lower labor costs. The whole point was to drain every global supply chain of expensive, entitlement-fed middle class labor. Now you want to spur the economy by giving workers who make nothing a tax break?
The Reagan Revolution sold out the middle class for tax cuts to the wealthy. We have an economy which depends on middle class consumption, but no middle class to buy things. We tried to fix it with credit cards. (We broke the bank)
The game is over. The backbone of our great postwar America is gone. The only way to regain the old America -- the one where the middle class had enough money to send their children to school and drive the consumption economy -- is to go back to the postwar policies which ensured the solvency of the middle class, the policies which Reaganomics destroyed so that it could give tax breaks to
the few. Our economy cannot afford the trillions of dollars that are getting locked into dynastic inheritances. Too much money is stuck on top. That money needs to find its way to the real economy. The distribution system is broken. And it can't be fixed by giving money to people who have more than they or their heirs can or will ever spend.
Silly rabbit. It's all about demand. If more of the total economic pie starts in the hands of the middle class, than the wealthy will have to add jobs and innovation to capture that money. This is how the great postwar economy worked. FDR made sure the middle class had more money to spend. And the innovators were forced to invest, innovate, and add jobs to get that money. Now . . . they already have the money. So why invest? There is nothing out there to capture -- nothing but a sea of growing poverty.
America swallowed poison in 1980.
