The Life of a Dollar, Taxes and Wealth Creation

This post is by Jeff Carter from Points and Figures

Last night, Biden’s speech was really good, if you are a socialist.  If you are interested in raising standards of living and wealth creation, it was a disaster.  Because the envy game is played so hard, people really don’t understand how wealth is created in the US.

Higher proposed taxes on high-earning people is a stupid idea.  So is raising the capital gains tax.   All proposals like that do is foment envy and tribal thinking.  Proposals like that seek to divide us, not unite us.

Remember, the government can never invest. It can only spend.  Government cannot get an investment return from the dollars it spends, because it doesn’t save or pay down debt with those dollars it simply respends them.  The multiplier effect of government spending as it relates to gross domestic product is close to zero.  Why?  Because it has to get those dollars from taxpayers, or issue debt which is a tax on future earnings, or simply print them which devalues existing dollars since the supply is now greater.

The other thing to remember is all resources are scarce.  If the government is spending on something, it crowds out the private sector.  Very few things are public goods.  When you look at the budget of NY state and the budget of the state of Florida you know something is amiss.

Keynesians will look at the above differently but like ostriches, they have their heads in the sand.

Most people think that if you make $500,000 in (Read more...)