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Authors, sign in!Take 40 taxing units and 1 of those units has $1,000,000 taxable income and each one of the other 39 units has $10,000 taxable income. What is the average taxable income?
Answer: $34,750.00
1 unit equals 2.5% of the group. 1 unit has 71.94% of total taxable income and the other 39 units each have .7194% of the taxable income. (You calculate the math, if you don’t believe me.)
Averaging those 40 family’s incomes indicates all is well. But, the reality is; it will not allow 39 of them to have enough to buy basic necessities, while one of them has more than they can spend.
Lowering the taxes on the millionaire is going to benefit the other 39 and increase demand for consumer products? I DON’T THINK SO!!!
A more even distribution of that income will, in fact, increase demand for consumer products. When we increase demand for consumer products, we increase demand for workers to produce those products. Increased demand for workers will increase wages. Increased wages will give those $10,000 units more money to spend.
How do we accomplish evening out the income? Graduated tax schedules is one way to do it. Narrowing the gap between CEO and top management salaries and the wages of the people on the floor is another way to do it. Government programs for construction of public buildings (schools, hospitals, etc.) or building or improving transportation infra structures will demand more workers. Demand for workers increases wages and eventually we have more spendable income in the hands of people who will shop for more products and that will increase demand for more workers.
We then have an expanding economy and everyone (rich and poor) benefits. Now, we have broadened the taxable income base and we can start decreasing the deficit spending and eventually start whittling away on the accumulated debt.
The ‘Boston Tea Party’ motivated the 99% (colonists) to rebel against the 1% (British Government and Trade Moguls). Our modern ‘Tea Party’ is motivating about 50% to support and reward the 1%. The ‘OWS’ parties are attempting to motivate the 99% to rebel against the 1% and demand more equal distribution of wealth and purchasing power.
Which party (Tea or Occupy), if successful, will benefit the most people and make our society a more rewarding and enjoyable experience for mankind?
Published November 4, 2011 by Ken Poland |
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Comments (2)
Ken, so long as our economy (70 pct of it) depends on consumer spending for goods and services, and so long as would be consumers have little or less to spend (or are fearful about spending it because the employment atmosphere) we are stuck in a continuing decline for the middle class and continuing impoverishment of the lower classes. The multi-national plutocrats, of course, have more options. Notably, they can move their capital elsewhere for cheaper labor and fewer regulations--and still make enough profit to live in gated communities here. At least that has been the case. The times may be a'changing.
Posted by Bob Hooper
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November 7, 2011 6:09 PM
Posted on November 7, 2011 18:09
Thanks, Ken for the good explanation. I like your explanation of how reducing economic inequality between the rich and poor would put spendable income in the hands of people who will shop for more products and that will increase demand for more workers. It's important to explain why reducing economic inequality benefits all of us, the rich, the middle class, and the poor.
Posted by Angelo Lopez
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November 8, 2011 9:27 AM
Posted on November 8, 2011 09:27