Thursday, July 08, 2010

Taxing the rich results in an employed middle class

There's a misconception about the whole "tax the rich" idea as a way of increasing revenues. People think, "Instead of paying $25,000,000 on a salary of $100,000,000, CEOS will pay $90,000,000 on a salary of $100,000,000 - that's $65,000,000 more into the Treasury per CEO!"

But this would not happen. Instead, CEOs would simply not be paid $100 million if $90 million went to the government. Instead, the CEOs would be paid $1 million, and the remaining $99 million would be rolled back into the corporation to hire people, who would then earn that $99 million and pay 30% or $30 million to the government.

But you say, "That's a $35million loss! $30million vs $65million." No it's not: all those workers would not be getting unemployment checks, section 8 subsidies, etc etc. Plus, those employed workers will now go out to stores with their salaries and increase demand on other American-made products.

So increasing taxes on the rich is a way of keeping money inside corporations so they can hire workers and pay them and create demand for even MORE domestic production.