I'm not really sure what this means from an article about Politics and taxing the wealthy 1%?"This money provides a service when it is invested, by taxing the rich the money will be taken from...

I'm not really sure what this means from an article about Politics and taxing the wealthy 1%?

"This money provides a service when it is invested, by taxing the rich the money will be taken from banks, reducing their ability to lend in the future. This would do tremendous damage to the economy and labour market. By owning shares on a huge scale, the rich provide an artificial value to share prices. This would no longer exist if they were forced to sell them on the level needed to balance the national debt" - Huffington Post

Asked on by g10121997

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readerofbooks | College Teacher | (Level 2) Educator Emeritus

Posted on

I can see why this except is hard to understand. The commonsense point that people are making, including the president, is that we need to tax the rich more, since they have more money. This makes good sense in many ways. 

This article is challenging this point. It is saying that if we tax the rich then the rich will not be able to invest their money as much. This lack of investment will have an effect in many areas. One of these area is in the banks. More specifically, banks will have less money of the rich and this will, in turn, have less of an ability to lend out money. Credit will take a hit. This will, then, have an negative effect on the labor market, which will make our economy worse. 

To make it even simpler, the money of the rich trickle down and this makes the economy stronger. If we take this money away through taxes, the trickle will get smaller. 

 

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