Taxes

Rich Recipients of the GOP’s Tax Cuts Aren’t Spending

JM Ashby
Written by JM Ashby

The GOP's justification for passing tax cuts for the rich is the idea that rich people will invest and spend the money which will then filter down to the little people, but that never happens, does it?

Case in point, CNBC reports that rich Americans are spending far less than average Americans right now even though they received a windfall from the Republican party's tax cuts for corporations and wealthy shareholders.

Luxury real estate is having its worst year since the financial crisis, with pricey markets like Manhattan seeing six straight quarters of sales declines. According to Redfin, sales of homes priced at $1.5 million or more fell 5% in the U.S. in the second quarter. Unsold mansions and penthouses are piling up across the country, especially in ritzy resort towns, with a nearly three-year supply of luxury listings in Aspen, Colorado, and the Hamptons in New York.

Retailers to the 1% are faring the worst, with famed Barney’s filing for bankruptcy and Nordstrom posting three consecutive quarterly declines in revenue. Meanwhile, Wal-Mart and Target, which cater to the everyday consumer, are reporting stronger-than-expected traffic and growth. [...]

The savings of the rich has also exploded, more than doubling over the past two years, suggesting that the wealthy are hoarding cash. The middle earners, or those in the 40% to 89.9% of the income distribution, have largely picked up the spending slack from the rich.

Economists who spoke to CNBC say there's possibility that this could result in a "trickle-down recession," giving whole new meaning to trickle-down economics.

Retailers like Wal-Mart and Target are still doing well because average people -- people like us -- have no choice to but spend a significant amount of our income on basic necessities like food and clothing. The rich need food and clothing, too, but spending on either represents a small percentage of their disposable income which they're apparently hoarding.

It's natural for anyone including rich people to cut their spending with a madman in the White House, but that's all the more reason not to give tax cuts to people who don't need it; people who were already the richest people in the entire world before they received another windfall.

The Trump White House and Senate Republicans have reportedly been working on proposals to cut taxes for the rich. Again.

  • waspuppet

    The GOP’s justification for passing tax cuts for the rich is the idea that rich people will invest and spend the money which will then filter down to the little people, but that never happens, does it?

    The people I argue with about this have completely thrown in the towel (of course they don’t call it that) and just say that even if it doesn’t work, what else are you going to do?

    This is what 40 years of GOP propaganda has done: They literally can’t think of anything to do but cut taxes for rich people again. (That’s the rank and file, of course; the richest Republicans know it doesn’t work and they just want to do it anyway.)

    The Trump White House and Senate Republicans have reportedly been working on proposals to cut taxes for the rich. Again.

    It’s just a smash-and-grab at this point. The Republicans know they’re in big trouble electorally, so they’re trying to line up high-paying, no-show jobs.

  • Ceoltoir

    You cannot have an economy based on a handful of billionaires. How many times has this stupidity been tried and always with the same result?

  • Draxiar

    All by design.

  • muselet

    The rich aren’t spending their tax cut.

    Quelle surprise.

    What I find particularly galling is that the rich are stockpiling cash rather than buying expensive homes. They’re waiting for housing prices to tank before they go shopping. They’re also waiting for another mortgage/bankruptcy crisis so they can buy up middle-class housing stock for rentals. So much for the dream of home ownership for the masses.

    The 1% did fine during the Great Recession and learned how to be even more efficient this time at monetizing others’ misery. They’ve even pushed for tax policies that will both give them more money and cause/exacerbate the next downturn.

    At the same time, the Rs once more propose to kill Social Security and Medicare, because they’re “unaffordable.”

    –alopecia

    • gescove

      “Monetizing others’ misery.” Well put!