Saturday, December 8, 2012

The Rich, Tax Increases and Trickle-Down.

A ditch-digger with heavy equipment earns a lot more than a ditch-digger with a shovel.

The difference is capital. Somebody bought heavy equipment with capital.

Capital is extra money.

The ones with extra money are the rich.

Some rich guy figured out a way to make a ditch-digger more productive than he had been, to make himself richer.

But it also makes the ditch-digger richer.

The extra ditch-digger income is trickle-down.

Trickle-down is not dimes falling from the pockets of the rich but the return to wisely used capital.

When you tax the rich more, their living standard doesn't change. Rather, their investment declines. The extra money goes first.

A tax on the rich is a tax on the earnings of ditch-diggers, not a tax on the life style of the rich.

Think of capital, extra money, as seed corn. Seed corn is extra corn that's not eaten. It's what gives you much more corn next year.

Taxing away the seed corn to distribute it as food is disastrous.

If somebody says, "At some point, you have enough money," he doesn't understand that money beyond enough money is the seed corn.