Social Question

SQUEEKY2's avatar

Wouldn't an economy of a country, any country do better by putting more money in the hands of the working class rather than rich people?

Asked by SQUEEKY2 (18258points) 1 month ago

Just wondering?
And no details needed.

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25 Answers

LadyMarissa's avatar

I would think so. When Baby Bush gave us that big check, I did my part by buying a new computer

Yellowdog's avatar

Look at how much better the economic numbers and employment stats are now for American workers.. They’re even talking about this in High School economics classes.

Why are you trying to imply the opposite?

elbanditoroso's avatar

You need a balance, All of one or the other us not sustainable.

You need companies to build things like factories and be able to make products people want to buy. So rich people – as long as they use their money productively – are necessary.

(Note: unproductive rich people – who just sit on their savings and don’t produce anything – they’re not helping the economy at all.)

But if the non-rich have no money to buy things, then all the wealth in the world won’t help a thing. What’s the point of building fancy houses or sports cars if no one can afford them?

So I return to my first sentence – a sustainable economy needs both a strong consumer (who has money to spend) and a strong corporation (that has the money to build desirable products)

if either is out of whack then you have a screwed up economy.

SQUEEKY2's avatar

@Yellowdog Thank you for getting defensive but I wasn’t just referring to the states but most countries in general, mine included.

Sagacious's avatar

Opportunity is something the government can help with. There is not a responsibility for it to put money in people’s hands.

stanleybmanly's avatar

Of course it would. You need money in the hands of people who will spend rather than hoard it. The money needs to circulate to drive the economy.

MrGrimm888's avatar

IMO. When the working class has money, they spend it. I was/am, mad at Obama for bailing out the banks in 2008. If they gave that money, to the poor, they would have spent it. It would have had a similar effect on the economy. People would have paid their loans, and bought stuff. If I got $1,200, I would have paid my rent, and bought something nice. The trickle up, would have improved most people’s lives, and saved the economy. But. The wealthy people who caused the problem, got the money…

They bitch, and complain about socialism, until it suits them…

JLeslie's avatar

Of course. America proved this a long time ago. We were considered one of the most prosperous countries in the world, and the US dollar was strong. Our middle class grew and we were proud of it. Soldiers were coming home from WWII and they were able to get educations on the GI bill, over the years labor unions were getting stronger so wages were increasing. Suburbs started to grow, and people spent money on new houses, cars, and vacations. This went on for many years, well into the 80’s. Then there was a technological boom through the 90’s, everyone seemed to have more money (of course it’s not true that everyone did) and people were spending a lot of money.

RedDeerGuy1's avatar

Sounds like a variation of the trickle-down theory. A trickle-up theory.

SQUEEKY2's avatar

A trickle up, works far better than a trickle down.
Trickle down has always thought if the wealthy are given the breaks to increase their income they in turn would turn around expand their companies, hire more people.
Problem is now a days the wealthy just off shore their wealth and business doing very little for the at home market.
The poor spend 100% of their income.
The middle spend something like 87% of theirs and the wealthy only spend 30some percent of theirs and the wealthy get the majority of the tax breaks, how’s that for fair?

RedDeerGuy1's avatar

@SQUEEKY2 the wealthy get the majority of the tax breaks.

Tax breaks are useless to those who don’t pay tax. I thought that the bottom 51%, in America, don’t pay tax and non-refundable tax credits are useless for the poor, disabled and some of the middle class.

MrGrimm888's avatar

The bottom line is that the poor, don’t need the wealthy…

The wealthy, NEED the poor. They need the poor, to fight wars, build infrastructure, pick fruit. Essentially. The wealthy would have nothing, without the poor. Their money, would mean nothing. Who would raise their children? Grow/harest their food? Who would protect them? Who would pave the roads, that they drive their nice vehicles on?
Who would work for them?
Basically, who would provide them with what their money provides them?

Nobody….

Yet, they treat the poor, like shit…

The poor, have no use, for the wealthy. The wealthy RELY on the poor, and middle class.

SQUEEKY2's avatar

And the wealthy could afford to pay more for what the poor and middle class do but alas greed always wins and the lower classes are treated like dog shit.

JLeslie's avatar

@RedDeerGuy1 The very poor don’t pay income tax, but they do still pay social security tax, Medicare tax (on their income). I guess the EIC refund maybe covers some of that. The first $12k of earnings is automatically exempt from income tax.

The people who make quite a bit of money also have the first $12k exempt, plus they often are putting money into retirement funds, which easily makes another $19k (or more depending on their healthcare plan) exempt if they work for a company. If they are self employed it can be double that is exempt, I don’t remember the limits. Business owners also write off other expenses depending on the type of business. Cars, phones, computers, etc. The small business owner gets to do this too, they may make only $35k a year, but write off $15k, so they pay almost no tax, because their income is taxed at $20k minus the $12k exemption everyone gets.

Low income people still pay sales tax, and they have to use all of their money to exist, so every penny they make is taxed that way. High income people save a bunch of money and it just grows more money.

However, the very poor also can apply for assistance, like food stamps and Medicaid, which easily is worth $5k to $15k a year depending where you live. Much much more if you have an illness, but I’m just talking about the equivalent of paying for health insurance.

The problem is a lot of low income people make too much money for assistance, but don’t make enough to get ahead of the game, it’s a constant struggle.

Lastly, capital gains income, like selling investment property, is taxed much lower. Real estate is a great business if you get lucky. Although, if you are middle income you do well here, because if you make under $78k adjusted gross a year you pay zero tax on capital gains. If you make more your tax is 10–15%. Much lower than income you work every day for. If you own the house you live in for 2 or more years, and you sell, and you are single, the first $250k in profit is tax free. If you are married $500k is tax free. There are people who move every 2 years for the free money if the real estate market is good. It’s harder for lower income people to even buy a house. Houses come with expenses though, so the profits aren’t always as big as they seem, but still it’s a benefit.

The taxation in America is very complicated.

seawulf575's avatar

The middle class input into the economy is enormous. They are a huge group that spends money and stimulates all portions of the economy. Unfortunately, you need to have jobs for that class to exist and to have money to spend. As the saying goes, I never got a job from a poor person. So you need the people that are investing in companies, that are building companies and are providing jobs. That takes a lot of money and risk. So rich people need money to invest as well, to supply the jobs that the middle class can use to buy stuff and have input into the economy.

gorillapaws's avatar

The backbone of any economy is a strong middle class. Investing in the welfare and education of the people so the best/brightest/hardest working can rise to the top is by far the best way for a country to prioritize it’s wealth. For example the money invested in the education of GIs from the GI bill returned 400% of it’s cost in increased lifetime tax revenue over the vets that didn’t take advantage of it. In other words, invest $50k in an education and get back $200k in additional tax revenues over that person’s life. That’s a very solid return.

SQUEEKY2's avatar

We need the wealthy to expand their companies and hire people so that is why the wealthy get so many tax perks, I HEAR THAT A LOT!! and don’t disagree problem is now a days the wealthy just off shore their wealth and businesses.
Instead the wealthy should only get a tax break if they prove they are indeed expanding and hiring people in their own country not off shoring their wealth to avoid taxation.

zenvelo's avatar

An important economic measure of economy (GDP) is Price (P) x Quantity (Q), the price of goods and services times the quantity of production.

And PQ is dependent on money (M) times the velocity of money (the rate at which it moves through the economy) (V).

MV=PQ

The economy grows by getting money in the hands of those who turn it over rapidly, people who buy appliances and cars and consumer goods, which should increase the wages of workers who in turn buy more themselves.

That is why increasing the minimum wage doesn’t price workers out of the market, but is a big positive for small businesses and the economy.

The very wealthy don’t turnover their money often enough to benefit the economy as a whole. And, they do not invest in new businesses that hire high paying workers. That is a recurring myth maintained to shift tax burdens to the middle class.

SQUEEKY2's avatar

SUPER GREAT ANSWER^^^ thanks.

seawulf575's avatar

I think there are a couple problems with the “rich” in this country. First off, we pay top executives way too much. Yes, they have important jobs and yes, they make tough decisions sometimes. But when you compare with, say, Japan you find a great discrepancy. The CEO of just about every Japanese company rarely makes $1M, a few make as much as $3M. Compare that to the 10s of millions we pay execs in this country. It’s not like the jobs are easier in Japan, they just have a different viewpoint on things. They believe in reinvesting in their companies, not just enriching their executives. If this nation would adapt that mindset, it would be much better. Workers could make a good wage, execs would still make a lot of money, and the companies would be set for growth instead of scramble as so often happens.

SQUEEKY2's avatar

GOOD ANSWER^^^ totally agree!

stanleybmanly's avatar

All of us agree. But here’s the truth. There is only one solution to the great handicap defining predatory capitalism. That handicap is in the certainty that all capital inevitably piles up in the hands of a few to the unavoidable impoverishment of everyone else. As things stand now, the only way we get away with it is through increasing debt. The safety net MUST increase as the average guy falls further behind in making ends meet. And that net is sustained through the government borrowing the money the rich SHOULD HAVE paid in taxes.

AnnJ's avatar

I think that it would not be bad, but how much more money, so that everyone is on an equal footing?

seawulf575's avatar

@AnnJ Welcome to Fluther! I’m not sure there would ever be equal footing, no matter what you did. People are different. Some are more intelligent that others, some are more aggressive, some want money above all other things….who we are and what we value varies from person to person. Equality isn’t in the cards….wealth would continue to redistribute itself. The only place we can be equal is in our freedoms to go after what we want.

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