Sep 24 2007

Cut taxes on the rich! How else are they ever gonna catch up with the super rich?

Published by at 10:47 pm under Humor,Supply-side economics,Taxes

Wow, what can I say? America’s rich are becoming “disenfranchised” as the super rich leave them behind. While the rich can barely afford one family boat and vacations to Martha’s Vineyard, the super rich keep yachts in multiple harbors and jet off to Italy at their whim. This is an outrage, and more should be done to narrow the gap between these disparate groups!

Cutting through the satire, this story does get at some interesting core economic principles, namely the impact of taxes on productivity and output growth. What arguments could seriously be made for cutting taxes for the rich? What role to taxes really play in redistributing wealth from one bracket of income earners to another?

In The Know: Are America’s Rich Falling Behind The Super-Rich?


About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

15 responses so far

15 Responses to “Cut taxes on the rich! How else are they ever gonna catch up with the super rich?”

  1. Drew Venkatramanon 26 Sep 2007 at 11:15 pm

    Some rich have to work years to make what most of the Super rich make just off interest alone. So it is possible for the super rich to simply stay rich off inertia alone. Economically the tax cuts would have serious breaks for the rich, because if you are stuck in the rich sector. You have money but you maybe give away 200,000-300,000 each year in taxes, at 5% interest per year they can get an extra 10,000 in the bank. This can be the difference between a Lexus and a Porsche.

  2. Calvin Luon 27 Sep 2007 at 1:07 am

    Is this supposed to be a joke? Coz I don’t see the point of cutting tax on the riches what so ever. Why do they need to pay less just because the super-riches is leaving them way behind? Is this that important? Is there any economic benefit? Yeah the quantity demand for luxury goods may go up, but in what way can this help our society? There are people out there who loves in poverty, and now the there’re talking about only having one boat is pitiful.

  3. Howard Linon 27 Sep 2007 at 8:49 am

    Yes cutting tax on the rich people might make them become poor faster. Because they will spend more at one time because they dont have to worry about taxes.

    However, if you really look at the Super-Richs, who ever really pay for all the taxes that they are suppose to?

  4. Timoon 27 Sep 2007 at 11:12 am

    LOL! This is a joke, you dumbass!

    I have heard as well, that there is no law behind IRS forcing you paying taxes.

  5. kevin maon 27 Sep 2007 at 10:24 pm

    I agree with Drew, Super rich and the rich people make money differently. The rich work for years to get to where they are and the super rich just invest a lot of money and make money off of that. Cutting tax for the rich won't really do anything, only they'll be able to save a couple thousand dollars but the gap between the rich and super rich will continue to be big.

    Also if there are tax cuts on the rich, they might just spend the money they made from the tax cut on something else.

  6. Michael Dailyon 27 Sep 2007 at 10:44 pm

    The main argument that could be made for lessening taxes on the rich would be to re-distribute society's wealth more evenly. I mean, if taxes from the rich were taken off and given to the super rich society's classes would be more balanced. However, this is not really a problem for the rich and should in theory be done with poorer classes. But I still can't believe how that guy in the video grew up rich. He even had to share tennis courts with other rich people!

  7. Annie Sungon 27 Sep 2007 at 10:52 pm

    The rich and super rich have different methods of income, and most of the super rich are probably born into old money anyway. I agree that the rich are the disenfranchised of the two groups, but like one of the commentors said, not everyone can "vacation in Italy." It's true that not all the upper class can be at the same level, or the country's money will be clustered into one economic group, instead of being spread out across the different classes. However, is making the rich catch up with the super rich a priority? There are plenty of families below the poverty line…so what economic benefits would there be from making the rich even richer? Perhaps increase the demand of luxury goods, but then again, these goods just continue to circulate around the rich/super rich, alienating everyone else. The rich are not super rich for a reason, whether it be their own motivational issues, or just plain justice in life, and giving them a break on taxes would close the gap between rich and super rich, but widen the gap between the rich and other socioeconomic classes.

  8. Jonathan Lauon 27 Sep 2007 at 11:46 pm

    hahaha… that video clip was hilarious.

    One of the greatest problems in our society today is the huge gap between the rich and the poor. There is really no reason to cut taxes on the rich or "super-rich" because they are making millions of dollars while the majority of Americans are struggling just to survive. Taxes help redistribute wealth among the different levels of society because the government uses the money to create jobs (along with many other things) so that lower-class citizens have a chance at earning money and improving their current conditions.

  9. Caleb Liaoon 28 Sep 2007 at 12:47 am

    The redistribution of taxes doesn't really help struggling Americans all that much. In a society where an obscenely small amount of people have any savings at all because of a culturally accepted hyper consumption of goods, I think that the main way to cut down the gap between the rich and the poor is to promote savings. Taxes can only do so little to close the gap between the rich and the poor, or the rich and the really-rich.

  10. Hansen Guon 28 Sep 2007 at 2:02 am

    When the government taxes the rich or the super-rich, the consumer surplus for them still decreases. I'm not sure it matters that much to them because they still retain much of their original utility. However, what does matter is that this new government revenue can help to benefit the needy. Catch-22 is, the rich usually have the pocketbooks to lobby for taxes against themselves and something not as graduated.

  11. Tae Rim Kimon 28 Sep 2007 at 7:55 am

    I thought this was..pretty ridiculous when i read the article. I mean, to us poor individuals (compared to those two classes) they don't seem to make any difference at all! I mean, super-rich and rich are both technically rich, right? I think taxes can play a role here by redistributing taxes equally among these two groups. Then, the rich wouldn't be falling so behind the super-rich. But it sounds a bit biased of what I'm suggesting…the poor should be the one who should be cut back on taxes, like Michael Daily mentioned.

  12. Timoon 28 Sep 2007 at 9:46 am

    Are you all here crazy? I mean really? Jesus! I guess you are all Americans. I hope this is only a hypothetical debate you are having here. The video is pure joke! That is no real people, no real ideas! It sooo doesn't matter rich or super-rich, you retards (yep,American way of life!)! it is more about the difference poor or super poor! How about that? The only sense of lowering the taxes, would be seen in the Laffer example. -I can't believe I am writing this!

  13. Teemar Ratanasirigulon 06 Oct 2007 at 5:23 pm

    ?????

    There is no way that this can be serious. I know that now to be considered rich you need an undiminishing $100 million in the States, but seriously, a debate of the rich and the super-rich….Some people are way too bored.

  14. andyxuon 21 Oct 2007 at 10:48 am

    Haha … The Onion

    Agreeing to the posts mentioned above, the discussion in the video fails to address 95% of the American population, it also fails to see that the rich are indeed rich because of the money they make from their professions and investments.

    Not all rich people are rich from the beginning. And not all rich people spend their money on extravagant vacations and luxuries.

  15. Chan Min Parkon 22 Oct 2007 at 8:35 pm

    In Korea, the gap between social classes is also becoming a problem. However cutting taxes will not be a solution to this problem. If taxes were really cut on the rich people, the gap between the rich and poor would be even greater and rich people are not going to become super-rich. If we really want to talk about in the economics way, if the government tries to cut taxes on certain people it could be like price controlling. There is a certain amount of money that the people can supply, and the government takes a certain percentage of demand for that, which is like the equilibrium tax that these people pay. If the government somehow sets a different price than this, as we have learned price controlling, it could have some very bad effects. Government should really be focused on closing the gap between poor and rich, since it is really becoming a problem now.