Re: “,” Dec. 8 George F. Will column.
George F. Will’s argument that tax cuts must be primarily for the affluent to stimulate the economy displays a lack of understanding of the economy. The top 10 percent may supply 70 percent of the income tax revenue, but that income is generated ultimately by consumer spending, which makes up 69 percent of the economy, called the Gross Domestic Product. Add in the velocity of money, or the quickness with which people spend the money they acquire. This produces a tiny part of the taxed income of Will’s top 10 percent every time a dollar changes hands. Money velocity is higher for people who cannot afford to save it, which is the middle and lower-income levels. Lastly, growth is stimulated by targeting the part of the economy that is constrained. Currently that is the incomes of the workers. So if you want to stimulate the economy, put more money in the hands of the middle and lower-income population.
ɲ.ܲ,Lakewood
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