It seems axiomatic that those who accumulate more wealth than they can spend save more of their income than those whose paychecks barely keep them afloat. Berkeley’s Emmanuel Saez’s chart below confirms (source):
In his book The Darwin Economy, Robert Reich (also teaching at Berkeley) reports that as more riches flow upwards to the top, economic output slows. Moreover, governments at all levels lack the resources to invest in public goods and services. As a result of the latter, bridges collapse, roadways deteriorate, schools struggle.
Meanwhile, and as you’ve no doubt noticed, the Republican presidential candidates propose to further reduce taxes on the wealthy. They say, without evidence, that making rich people richer will spur the economy and thus boost government revenues. Jeb Bush claims that his “new” tax plan will grow the economy by an annual rate of four percent; Donald Trump, of course, does Bush one better by claiming a six-percent growth rate should his proposal be adopted. Both plans recall “voodoo economics” sketched on Arthur Laffer’s napkin.
Back to savings. It’s clear that the wealthy’s surplus has not trickled down to the Rest of Us. But why not contribute to the commonweal? Why not spend a bit of their surplus to help provide necessities for the bottom 90 percent? Why not, to borrow from Trump, make America great again?
Never mind. That would require more taxes.