How To Stimulate The Economy? Cut Taxes For The Rich
December 26, 2001
Who has lost the most due to the stock market fall and the recession? While the poor may suffer the most privation, says Bruce Bartlett, the greatest losses have been among the richest Americans. While we don't necessarily feel sorry for losses among higher income individuals, since they are the ones who provide the bulk of capital investment that will create an economic recovery, tax relief for them should be an important element in an economic stimulus bill.
According to a Census Bureau study released earlier this year, those in the top 20 percent (quintile) of households, ranked by income, own 58.6 percent of all stock and mutual funds in terms of value.
This means that those in the top quintile have lost the vast bulk of the money resulting from the steep fall in the stock market since last year.
- The combined value of all stocks on the New York Stock Exchange and the NASDAQ market peaked in August 2000 at $18.9 trillion.
- As of the end of October 2001, this fell to $13.4 trillion, a decline of $5.5 trillion.
- This suggests that those in the top quintile have suffered a loss in wealth of more than $3 trillion in just over a year.
As a result, wealth is far more equally distributed now than before the stock market crash. But there is not a single poor person in America who is better off because people like Warren Buffett and Bill Gates are billions of dollars poorer.
However, Senate Majority Leader Tom Daschle (D-S.D.) has blocked passage of an economic stimulus package just to stop corporations and well-to-do individuals from getting even the tiniest bit of tax relief.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, December 24, 2001.
Browse more articles on Tax and Spending Issues