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Zoltan's avatar

While I take your point about taxing the rich not redirecting resources by reducing consumption (since relatively most of this money is not being used to consume*), there are other reasons. One is to make a political point. The second is that the consumption of the majority is being done with a smaller and smaller share of the national wealth. So how to rebalance things so that instead of the top 1% having as much as the bottom 40%, this can be brought down to 30%, and then, hopefully, eventually to 20%. Some change in taxation along with other changes is needed to try to slow or stop the current flow of money upwards to this minority where it grows and gets used mostly to further speed the upwards flow. The third reason is to play the bond markets at their own game. They claim to be enforcing market discipline on the government for not funding its spending through taxes - so tax them! Hilarious, and poetic justice.

*although real resources respond to demand signals, and since the rich have the most money, then when there is a constraint, the resources end up being used for whatever projects they have. Including building unaffordable housing and endless luxury flats, buying up farm land, funding politicians, buying up the media, flash cars and watches and clothes, and paying for the stream of neoliberal propaganda. The consumption of the rest will soon be reduced to rent, mortgages, energy, food and transport. Non-essentials will become unaffordable for most, and as poverty spreads the tax base will shrink. The gradual withering of discretionary spending, as immiseration continues, will mean that consumption falls, leaving a growing gap and a collapse in all the businesses that depend on such spending. A little higher tax on the wealthy would at least cheer some of us up.

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Jan Wiklund's avatar

I am as perplexed as Zoltan Jorovic. We all know that the more unegalitarian a society is, the worse it performs economically. It used to be a leftist standpoint, but even the IMF and the World Bank think so nowadays. So why not tax them away, and we will all be better off?

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