Wednesday, August 24, 2011

Wealthy , the trickle down does not work?

Over the past few years; all I hear is that the rich people need to be taxed more. As a matter of fact, Warren Buffett published an article, Stop Coddling The Super Rich, in which he said that he only paid just under $7 million. His argument is that he makes money from money, he is an investor, so his percentage is lower then someone working for their money. The question is, what did he do with the money he did NOT give to the government? If I had to guess I would save he invested it or bought stuff. Him investing that money means that someone else is making a commission off his transaction, they are taking their paycheck and purchasing items from companies that have employees, who in turn take their paycheck and purchase more product – I hope I am clarifying how this trickles down.

A couple of years ago; a congressperson was on the floor arguing against extending the “Bush Tax Credits” and he put on a really good presentation with graphs and stats on what the rich people could do with the money if they did not pay the difference in the taxes. One of those items was something like and new $250 purse everyday for the next ten years. I got to thinking about this argument and that would be AWESOME? If you were the owner of that company, how many more employees would you have to hire to keep up with these rich peoples spending. Now that you have all these new employees, they are going to need daycare so guess what, the day care’s have to hire more people. The transit system may have to hire more people, because they are now using the public system. Grocery stores are buying more supplies to keep up with the everyday persons spending.

So, wealth itself might not trickle down but when the wealthy are spending money more jobs are created. When they are not spending the money people are losing job, and it is always going to be the little guys. So even though they are not directly hiring their spending causing the hiring.

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