Do you think that taxes on the rich actually slow the economy?Do you think that taxes on the rich actually slow the economy?

Expert Answers
pohnpei397 eNotes educator| Certified Educator

It is certainly possible to argue that excessively high taxes on the rich do slow the economy.  This is because the economy relies more heavily on rich people to create jobs and high taxes might discourage the rich from doing the things that create jobs and economic growth.

Rich people create jobs by investing.  They may create their own businesses and employ people that way.  Their money may go into stocks and such and allow companies to expand and employ more people.  In these ways, you can argue that the rich are the basis for economic growth.

If government imposes excessive taxes on the rich, they may not be inclined to try to make more money by investing their money.  They may figure that it is not worth the effort if too much of the money they gain is going to be taken away anyway.  They already have enough money to be comfortable, so why go to a lot more effort to make another $1 and see $.50 of it taken away?

If high taxes have this effect on the rich, they certainly can slow the economy as the rich stop investing and doing other things that help the economy grow.