Higher taxes on wealthy won’t trigger new crisis - Jack Kligerman - analysis

Our responses in bold.

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The claim that raising taxes on the wealthy would throw us back into a recession because the “job creators” — the wealthy 1 or 2 percent of the population — would no longer have extra money to spend (assuming that they do not have everything they want already) and would therefore cause great job losses is a fairy tale (polite language for “a lie”). (Typical for the Left, Mr. Kligerman confuses two concepts: High income earners and wealthy people. The two are not the same. Leftist rhetoric attacks the highest wage earners as the top 1%, but they are not necessarily rich. But the real problem is his simplistic equation. Jobs are created when there's work to do, not simply when there's money to spend. 

The problem in the economy is not that the rich aren't spending their money [or by an extension of Mr. Kligerman's logic, that they aren't being taxed enough so that government can spend it], it is because there is not enough work to be done, because people aren't buying things. However, to speak to his point, it doesn't matter how much a person has or earns when it comes to taxation. Taxation takes money from the person who earned it and gives it to someone who did not. It has absolutely zero to do with how much the taxee can afford. Taxes are not based on affordability, they are based on the need for government to raise revenue.)  

After all, a millionaire who had $1 million 10 years ago, when the Bush tax cuts went into effect, would today, without investing any of that money and just letting it accumulate at the .046 percent tax rate savings, have a total of $1,714, 438 (by compounding the savings). (Um, no. The accumulated amount would be 1,004,509.12. The lump sum accumulation described by Mr. Kligerman would need to earn a rate of 5.55% to get to $1,714,438 in 10 years. But even then, the earnings themselves are subject to taxes.)  

Someone who had $10 million 10 years ago, would have $17,154,380. And someone who had $100 million 10 years ago would have $171,154, 380. This has nothing to do with new revenue on their part. It would happen automatically. (Automatically? So a person who is thrifty and responsible, who sets aside some of their money, invests wisely, and manages to increase his savings is getting there automatically? Nonsense.)

Should the tax rate rise to Clinton’s .046 percent (Hmmm. What is he talking about here? Where did this .046% number come from? Last we saw, the top marginal tax rate was supposed to go from 35% to 39%, which is a 10.3% increase. 

But it is interesting that Mr. Kligerman is focusing on one factor from the 1990s, the highest marginal tax rate, as if that was the sole relevant factor. However, there are perhaps millions of variables in an economy the size of America's, and yet for Mr. Kligerman, we only need to do one thing, raise the top marginal tax rate and we will magically transform into the 1990s.), 

which is what President Obama wishes would happen, and on which platform the Democrats ran in this last election, how long do you think it would take for the $1,714,438 to revert to $1,000,000? In other words, as the .046 percent is deducted from the coming years’ $1 million, the prior total nonetheless would keep growing through investments of the last ten years “profits.” (Whew. Now Mr. Kligerman is connecting an increased tax rate to a rate of return for an investment. He seems to think that the tax rate and the rate of return cancel each other out somehow. But note the context of his remarks. This sum of money set aside will grow, he says, so let's tax it more since it will still grow anyway. And apparently he believes it will grow no matter what sort of taxation occurs.) 

Given the financial smarts of millionaires and their advisers, the $714,438 itself — given no great recession or depression — would keep growing. So I would bet that the “profits” would never disappear. (Wow, it seems we are now entering the realm of ignorance. Mr. Kligerman appears to believe that there is no investment risk. Millionaires just make more money without doing a thing, and it's automatic and guaranteed. Therefore increase taxes on them, they're not working for it anyway!) 

Millionaires would never have to stop spending and the economy would never have to suffer (Now it seems he thinks it is the fault of millionaires that the economy is suffering. Monetary policy, tax structure, regulatory environment, consumer demand, education, workforce composition... none of this is apparently relevant.), 

therefore, as a result of the reversion of the tax rate to that of the Clinton years (There we have it finally. The only reason the Clinton economy was so good was due to one single factor: The top marginal tax rate. Hooo boy...) 

and for this the Republicans want the middle class to bear the burden of new revenue (They do? Who has advocated this? Indeed, what conservative Republican has ever advocated taxation to obtain new revenue? They want to cut government, cut taxes, and cut regulation. No Republican is looking for new revenue, let alone putting the burden for it on the middle class.)? 

And are willing to risk a “fiscal cliff ” for? No blackmail this time.

Jack Kligerman

(This man is confused. He thinks he's laying out a case for taxing the rich, but what he's really doing is demonstrating his lack of command of economic and financial concepts. The sad truth is, this is the level of competence of the typical elected representative in D.C. as well. These people aren't smart enough to control a multi-trillion dollar economy. They don't have enough information, and what they do know is often faulty, as evidenced above. It's no wonder we're in the mess we are in. No doubt the banksters and Wall Street types have some blame here, but the Big Player at the table is government, led by ignoramuses totally convinced of their own superiority.)