If you are referring to the "cash-out puzzle" for households that receive food stamps, there is a trade benefit effect arising from interactions among heterogeneous members of a household having two kinds of assets.

But heterogeneity in households is not a characteristic of poor households only. Will there be a diminution of trade benefits in wealthier households from which funds are taken?

No I'm referring to the rate of return on the GDP that different types of stimulus spending creates. The rate of return on foodstamps is something like 3 fold whereas the rate of return on tax breaks to the ultra wealthy is negative. That is to say our economy loses money when we give money to the rich.

http://i.imgur.com/iULtO.jpg


As you can see per each dollar the government invests into the public (tax breaks or otherwise) the rate of return for none is as efficient as simply giving the poor food stamps. The reason being 100% of this money is spent domestically.

I'm sure you're familiar with the notion (and the economist's name escapes me) that by reducing tax rates you reduce the burden on business owned and as a consequence investment and businesses grow. Well the same economist also said that at a certain point lowering taxes will not have a beneficial affect on society. As you can see we have very much reached and cut taxes even further.

"As you can see per each dollar the government invests into the public (tax breaks or otherwise) the rate of return for none is as efficient as simply giving the poor food stamps. The reason being 100% of this money is spent domestically."

So what your saying is... We should take take money from the rich because they save and invest; and give the money to the poor because they buy domestic consumer goods.

Is this the totality of your argument?

Correction, BO said that the rich don't invest and sit on what they have cause they will be fine! The poor invest, cause they have to.

This is just a correction to your last statement deadcode.

So you are saying the rich don't invest?

its true. the rich dont invest 100% of their income in food, whereas the people who are given food stamps invest 100% of those foodstamps in google stock options. oh wait.

Anything you don't use you generally save or invest, right? The rich generally, if they do invest, put their money in things that don't actually impact our economy (or at least that's what the data is showing) such as foreign markets (china) or simply in stocks. Investing in bonds and the stock market do not actually contribute anything to the GDP and these types of investments don't create jobs. But I'm sure I don't have to explain that buying a portion of a company that's already been bought actually produces nothing. There's actually on old soviet adage (my dad told me it) that says something along the lines of this: "for every profit made in the stock market, someone who worked for their money is robbed." And if you take a moment to think about it, it's true.


So in revelation of all this, if the government was some sort of evil robin hood that stole from the rich and gave to the poor it would actually benefit society more than cutting the taxes on the rich. It worked rather well for the communists in most every nation. However, simply equalizing everyone's income is unsustainable, and I'd doubt you'd see many people suggesting we actually do that. In fact what I (and any social democrat) think the government should do is invest in public goods like education, utilities, health, etc. Such government spending would be far more effective in boosting our economy in the short term and it would have long reaching impacts on the future of our country.

Lastly I'd like to say that you are misunderstanding what taxes do. Sure, on one level taxes are in place to keep the government running, to fund our military, to fund our schools, to fund the police, to fund the mail, to fund our public goods. On another level, that often conservatives misunderstand, graduated tax brackets are in place to protect society from wealth condensation. Now I've mentioned that term before, but let me explain it: wealth condensation is the economic theory that as one acquires more wealth in a capitalist market, he will be better equipped to acquire even more wealth. This is true because wealth is capital and capital is a mode of production. Ultimately graduated tax brackets are in place to protect society from the exponential increase in wealth among those who have it. Furthermore, the more money the government takes it, the better services it can provide for those that need them (the poor and middle classes). So really, the rich, who got rich because of opportunities in this great nation, are paying the government so that others also have the opportunity to get rich. If we didn't have a graduated income tax we would probably end up like the United States did in the 1880s-1930s -- with huge income inequality and titans of industry like Rockefeller.

Fun fact about Rockefeller, he was so wealthy that he lent the United States money from his personal bank account. He was also the world's first billionaire.

Also dead, please actually read the discussion. I was proving to skrum that the tax breaks for the rich are wholly in effective at supporting the economy. I was not arguing one way or another as to whether the government should play Robin Hood.