The Top 10%

Judging from comments and site visits, these posts aren’t all that popular but oh well.  Movies are slow, and this is my blog afterall.

So I was reading an article that stated a fact about taxes in the US:

70% of taxes are paid by the top 10% of Americans

That’s a pretty staggering statistic.  The imbalance of wealth is so out of whack in the US that the bottom 90% of people are almost trivial in terms of taxes; and in essence, the economy.

But that doesn’t mean the bottom 90% aren’t important to the economy — it just means their wealth isn’t their most important contribution to it.

The truth is that for the US economy to prosper, that top 10% have to be happy campers.  They have to be starting businesses, investing money, and buying yachts.

The orders of magnitude in difference between the wealthiest and poorest is so great that a wealthy person spending 10% of their income could be more impactful to the economy than a poor person spending 100% of theirs.

That being said, however, that doesn’t necessarily mean that the only viable option is to cater to the wealthy.  Before we talk economic theories, we have to first identify the goal.

Despite your leanings, it’s a mathematical fact that in order to get money into our economy we have to get the top 10% spending more money. 

Right or wrong, the top 10% simply have too much money to ignore.  The bottom 90% can spend all of their income and still not equal what just a few percentage points of wealthy spending could contribute.

I think both political parties have potentially viable ways of meeting this goal.

On one side, the concept is to give the wealthy tax breaks that would, in theory, convince them to spend and invest more money; ultimately releasing more funds into the economy and helping it gain ground.

That is a direct approach, but not necessarily any more successful than the less obvious approach; give the bottom 90% more money and let them spend it.

Although the amount the bottom 90% funnel into the economy is almost trivial, they offer something more intangible — opportunity.

The wealthy mostly got wealthy either directly or indirectly through providing services or goods for that bottom 90%.  If that bottom 90% starts to look like a potential cash cow, then the top 10% jump into action to get a piece of the pie.

Even if that pie is tiny in terms of total wealth in the US, it is a perfectly filling pie for an individual company or person.  Capitalism kicks into play as the top 10% try to get the money the bottom 90% are now willing to shell out.

Either way, if the theories work out to perfection, the top 10% is spending its money vigorously and the economy thrives.  That helps every American from the top to the bottom.

The top 10% make more money, so they pay more to their employees, who then spend more money to benefit the top 10% who pay more to their employees.

I don’t know which theory will yield the best results in today’s economic environment, but I’ve come to the conclusion that the goal is an undeniable effort to get the top 10% to spend more money.

Accomplish that, and things will start to improve for every single American.