To build on a previous posting around a flat tax system for individual income, I wanted to continue the conversation further on how a flat tax may or may not jumpstart economic growth. Further, I wanted to tie this with another on-going topic, the OWS protest against the 1%.
Consider the following facts:
- The top 1% of Americans own 42% of US financial wealth (Average wealth = $14M)
- The next 19% of Americans own 50% of US financial wealth
- Bottom 80% of Americans hold 8% of financial wealth
- The top 1% of Americans earns 21% of income (Average Income = $1.5M)
- The next 19% of Americans earn 40% of income
- Bottom 80% of Americans earned 38% of income
Source: Wealth, Income, Power
The argument for a flat tax system is conceivably:
- Flat tax system is simpler to manage
- Flat tax system encourages economic growth by letting American's keep more of their own money in their pocket and invest in the economy.
The question I have for the monkeys is this:
- If the wealthiest (and conceivably most sophisticated) Americans already have large amounts of available capital, how will a tax cut spur economic growth?
- What alternative to a tax cut will encourage real investments in our economy?