US Tax Cuts "Aftermath". This is What the Wealthiest 1% Will Do With the Extra Bucks
Despite some outrage from the Dems, and a legit concern in regards of a deficit unbalance, America will witness the largest tax cuts since Reagan. There should be little to debate on whether lower taxes will do to the economy, especially if you understand there is no more efficient use of a penny than that of its owner himself. Personally, I am for abolishing all taxes (a flat income tax would be a great start), but we all should celebrate when anyone gets a cut.
Dems argue that the cuts will "...let the wealthiest 1 percent steal the future of the middle class in America", a point that is far away from showing legitimate empathy for the middle class; on the contrary, it feeds division among citizens, and only seeks votes -the ultimate goal of all politicians in power-. Those Representatives and Senators that have showed concern about the deficit, have not called for its reduction (cutting public spending) but only want taxpayers to keep funding their beloved nanny state. Not surprising whatsoever. How else would they buy votes for their endless re-elections? (Pelosi, for example, is a “professional” politician, active since 1981. Has she created any value to society? Honest question)
For those who are truly worried about an increase in debt, the next step is to push for massive cuts in federal and state spending. Abolishing expensive federal agencies (DHS, EPA would save $ 60B altogether) and defunding inefficient bureaucratic organizations like UN and OAS would not even be noticed (these two latter have achieved literally nothing). Also have in mind that the tax cuts will do their part too. An expected result of a tax reduction is an increase in collection. Just Google “Laffer curve” and you’ll understand the dynamics (we’ll refer to this later on).
A tax cut means nothing else than keeping more of your own money in your pocket. This is true regardless of your net worth or your purchase power. In short, whether you are rich or not, you’ll find yourself thinking about what to do with those extra bucks. The more money you get to manage, the more options you have.
For the sole purpose of making a point, let’s say Dems are right, and the tax cuts will only benefit the rich. Here’s what they would end up doing with that money:
Pure consumption
Some “greedy”, selfish billionaires may carelessly spend every single penny, especially if they are fool enough to dismiss their potential future growth plans. In short, pure consumption without expecting any return. Not all goods and services are an investment per se. Examples include a luxury vacation, very expensive clothing, exclusive dining, etc.
A rich person on a shopping spree should be welcomed by those who are against “income inequality”. Wealthy people will not increase their net worth if they spend all their untaxed income in luxury needs. Not only will that money be (voluntarily) distributed among those involved in the selling of the demanded goods and services (business owners, employees, suppliers, etc), but also it will collect more taxes (as Laffer curve shows).
Increasing investment
This is already happening. If you paid attention to the picture on top of this post, you will have noticed that, following the tax cuts, CNBC and AT&T announced they will increase both wages and investment. These examples speak for themselves. Believe it or not, there are wealthy people smart enough to invest any additional income in their own companies. This means more capital, technology, research and of course jobs (among other benefits for the economy).
Saving the extra money
Saving comes before investment, always. In other words, someone has to either save (delaying consumption) or get a loan from a third party in order to start a business. The latter will most likely require a financial institution, which in turn has been trusted by its clients who have deposited their new savings in their accounts. Such savings are channeled into loans or investments, making profit (interest). Banks will grant more loans to those investors who wish to start a business (both parties want to make additional profit, remember that there will be more incentives as a result of lower tax rates). So, even if those wealthy, privileged folks do not want to put their money to work, but rather deposit it in a bank, it’ll end up funding a new business or the expansion of existing ones.
I totally agree that the deficit is a concern, but pointing towards it as the consequence of the tax reduction is a stupid mistake. Billions of dollars are being wasted in federal programs, regulations, agencies, etc. This deficit and tax debate reminded me of a text on a book I am reading. It goes like this "the Federal Government and the States should be banned from adding debt to future generations of citizens for these unborn taxpayers did not even elect them in the first place". Take good care of your pockets, instead of fighting against honest companies (who have no control over you), call out politicians and demand your money back.