A tax break for Rich Person(s).

As a follow-up to the last post:

What if high earners could deduct every single dollar they earn above a certain threshold?

The only requirements would be that they would have to spend said dollars on non-durable goods/services, and said dollars would have to be spent domestically. (Deductions or tax credits on energy efficiency goods would be separate.) Perhaps we could add in deductions on construction costs minus added property value.

This will encourage Rich Person to hire his maid and chef, encourage him to support local businesses, restaurants, etc. Rich Person can still enjoy the good life, and others will benefit from his enjoyment of it. It will stimulate the economy. It will support and create jobs. It will help stem the flow of money to the very top, and thus help stabilize both society and the economy.

Otherwise, taxes are collected and go through the IRS into the government, and the government decides how it is spent. Some of it will come back to the local poor folks through various programs: welfare, medicaid, etc. And some of it will be spent on helping poor people in Afghanistan and some on killing other poor people in Afghanistan.

If you are a Rich Person, and you like how the government uses this money, you would certainly be free to not spend your money and to pay taxes on it instead.

If you spend it, the IRS will still get some of it through increased earnings of people in the businesses thus supported. But also, local governments and programs will benefit through increased sales tax revenues. The local schools may improve. Local employment rates will improve. Maybe the crime rate will drop. It could have all sorts of benefits.

So, maybe the wing-nuts on the right are right after all. Maybe cutting taxes on the rich can help heal all that ails us. The theory is that Rich Person will spend the money, businesses will be created, jobs will be created, etc. This seems to make sense. But he has to spend or it doesn't work, and it has to be spent in certain ways. This tax deduction may be how to make it happen.

Are you a Rich Person? Do you earn a high income? No, not you, Mr. $100k+ talent. I mean a Rich Person.

Spend your money.

Consume conspicuously.

Only do it consciously.

More and more wealth has been flowing upwards, and more and more cash is sitting in the accounts or portfolios of Rich Person, who is already very wealthy. And there it only helps very few people. Rich Person himself, Rich Person's spouse, Rich Person's accountant, Rich Person's broker.

As much as we complain about rich person showing off his wealth and complain about wasteful spending, what we really mean is that we are envious of the extra wealth he has to spend. "Why does Rich Person need a pool, a pool boy, a gardener, a maid, a chef? If I were wealthy, I wouldn't spend my money on such things."

Such are the traditional values of the middle class (although these values have clearly faded). We were taught to spend wisely, to not waste our money, to save. But, if you are a Rich Person, you can still do those things, and still spend. A lot.

Pool boy, gardener, maid, chef, butler = 5 more people with jobs. Pool supplies store stays in business, maid uniform store stays in business, etc. All these people are better off when Rich Person spends his money. It trickles down, see?

No, I'm not one of those people. But it does make sense, if and only if Rich Person spends his money.

Now that I have convinced Rich to spend his money, I will implore him to do it consciously.

Rich Person: Think about who will benefit when you spend. Is it going to help China's economy? The U.S. economy? The local economy? Will it help support another local job?

What about saving the planet? Environmental impact? You have the resources to actually install solar panels, an investment us commoners may find to costly to make. You have the ability to pay more for products from companies who have adopted sustainable practices.

There are many opportunities to make a positive difference in the world, using only your wealth and your common sense.

Spend. Spend wisely, but spend.