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Author: Knighted Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 457586  
Subject: Re: the great problem of misperceptions Date: 12/18/2012 9:20 PM
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We recently have seen the concept of raising taxes to make reinvesting of monies into the corporate sector by the wealthy more attractive than investment of monies by the wealthy into hedge funds as it now stands. This means raising capital gains taxes on the wealthy and a modest rising in income taxes.

At this time I believe the American public with almost seventy percent support for tax hikes on the wealthy is more in the know than they have been in years. God bless them for coming around.


You're clearly less "in the know" than you think. You choose to believe in economic faerie tales even while facts are beating you over the head, desperately trying to get your attention. It's like you're a rubber wall, and facts bounce off of you. The username is fitting, I suppose.

Fact #1: Raising taxes on the wealthy.. heck, even confiscating every dollar of wealth they own and ever produce, will barely make a dent in the deficit. In addition, substantial evidence suggests that raising their taxes would not only be detrimental to the economy by harming growth, but it would also produce less revenue than anticipated as a large portion of the wealthy move their money to more favorable investment vehicles, reduce their taxable income, or move abroad to escape burdensome taxes.

Fact #2: Money invested by the wealthy does not disappear into some black hole, never to be seen again. The very reason that stocks, hedge funds, bonds, whatever it may be provides a return on investment is that somewhere down the line, that money is being put to use producing an even higher return such as through capital investments by businesses, start-ups by enterpreneurs, or borrowing by individuals.

Fact #3: Trying to trick Americans into spending more, whether it is by taking on more debt, zero interest rate policy, or incentives, is not the key to economic growth, especially when Americans are already buried to their eyeballs in debt. Never in the history of the world has sustainable long term growth been built on consumption. Long term economic growth has only been produced by the opposite - strong investment. Every country that has had blistering economic growth rates in the last 100 years has been propelled upward by investment, not consumption.
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