Friday, June 23, 2006

They're all dead!

Well, Goober must have finally shot all the squirrels on his wooded Afton property and needs money to buy food. That’s the only explanation for Captain Fishsticks’ post They don’t need it, but the rest of us do.

Sticks is reacting to the Thursday advertisement described by WCCO in a web story Wealthy Minnesotans: We’ll Pay More Taxes. In the ad, 200 wealthy Minnesotans took a full-page ad in the Strib saying it was time for a modest increase in the State’s income tax. The burden of the increase proposed was small and falling on higher-income wage earners, including the aforesaid 200 wealthy Minnesotans.

Sticks gives the laundry list of all the socially useful things these wealthy people could do if they just hung on to their money:
If they spend it, it flows back into the economy at full value. For example, if they buy a $700,000 home, they get a $700,000 home. If the government collects $700,000 and builds seven homes, each home will be a less than the expected $100,000 because of government taking its administrative cut and the inefficiencies of bureaucratic functioning. [italics are Spot’s]

If they save it, that money becomes available for others to borrow and either spend, same results as above less the cost of interest, or invest in a business. The latter increases the value of the money more than simply spending it. The rich guys may not need their interest, but the rest of us need the jobs created by the new businesses borrowing the money or the increased business generated by consumer borrowing.

If they directly invest it in a business, again wealth is created. All those seniors living on 401Ks and retirement funds benefit from a healthly stock market.

All standing in sharp contrast to that black hole of gummit spending!

Well, our luckless squirrel hunting friend may be many things, but an economist he is not. Let’s see if Spotty has this straight, Sticks: if a rich person spends a dollar, it’s good, if the government spends a dollar, it’s less. Just by spending that dollar, the government makes part of it dissolve? This is, of course, just so much trickle-down horse puckey. Income disparities in this country are greater than at any time since the Gilded Age. (Look it up; Spot’s busy.)

And don’t you just love Sticks’ first example, how it’s better to permit the rich man to build his $700K house than house seven families at “less” that $100K each? Let them eat cake! Sticks was using this example to try to illustrate that dollars shrink in government washing, but it is a great insight into his priorities. And government’s administrative cut? That money doesn’t evaporate; it is spent on employment and the purchase of goods and services. Sticks, you could also ask Dick Cheney if public spending creates wealth!

It is also a fact that state income taxes are deducitible from income for federal tax purposes, making it a cheaper way (not to mention more progressive way) for the state to raise money than say, sales taxes (which are, in the main, not deductible) or some "fees."

Now Sticks, Spotty has never met a dollar he didn’t like. But Spot is smart enough to know that some level of public spending on things like infrastructure and education pays handsome dividends to the State. It is regrettable that you are so alienated from the society you live in, and so self-absorbed, that you can’t see that.

Tags: tries to explain

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