Splash the Middle Class Economic Theory
Unlike the largely discredited "Trickle Down Economic Theory" which pre-supposes that tax benefits to the wealthy slowly trickle their way down to the middle and lower economic classes, Splash the Middle Class Economic Theory is based on the notion that by focusing most of any tax relief on the middle class, the resultant economic benefits would not trickle down from a relatively small number of individuals at the top, but instead would create a splash in the middle from huge numbers of people in the largest US economic class. This economic "cannonball" would dramatically and immediately impact millions of US citizens and would spur a tsunami of national economic growth that would dwarf that of anything that might result as a result of trickle down economics.
The economic benefit of focusing tax relief on the middle class as opposed to the upper class is self-evident but is best understood by comparing not only the number of citizens in each category but also by the comparative need for individual consumers to spend the thousands of dollars that such tax relief would provide.
Begin with the sheer number of households in each economic class:
According to the Bureau of Labor Statistics, as of 2016, there are 125.82 million US households. The top 1% US upper class who would most benefit from the current tax relief being proposed by the US Congress represent 1.3 million of those households. A significant number, to be sure, but one that is dwarfed by the number of Americans considered to be middle class. According to the Pew Research Center approximately 51% ( 63 million middle class households) are classified in this group. Clearly and unarguably, tax relief focused FIRST on the middle class has a moreIMMEDIATE impact on a far greater number of citizens.
However, that is only one part of the equation. Trickle Down Economic Theory suggests that by providing the greatest amount of tax relief also allows the wealthiest 1.3 million households to spend more, which, in turn, trickles down to the middle class because jobs are ultimately created by the expenditures of the wealthier group. In short, the theory suggests that wealthy households will spend more if given more tax relief. The problem with this theory is both that history does not bear out the hypothesis and again, the reality is self-evident. This is because providing additional wealth to a wealthy person presumes that any number of thousands of dollars in additional spending power will motivate a wealthy person to spend more. But consider: the wealthy currently have sufficient surplus wealth to spend on whatever they might want. What's holding back a wealthy person from buying a new car or a new refrigerator or taking a vacation to a neighboring state is not lack of money.
On the other hand, many of the 63 million American households who are members of the middle class do not currently have surplus resources to spend on all of the items listed above. This is self-evident and can be evidenced empirically and anecdotally. By focusing tax relief on those 63 million middle class households, it is far more likely many will opt for a new car or refrigerator, or take a vacation in a neighboring state that they might not have otherwise taken.
If Congress is sincere in its desire to provide tax relief as a stimulus to the US economy, then it should spur economic growth by focusing on the 63 million American households who have largely been left behind in this economy.. The American middle class has waited patiently and in vain for 40 years to feel any significant impact of trickle down economics. It's time the "Splash the Middle Class" economic theory was employed. The result will be a tsunami of economic activity and shared prosperity the likes of which this country has never seen.
America who will be the most motivated to spend a significant portion of any tax relief they would receive.
WILL spend the money that results from tax relief on things like new cars, refrigerators, home improvement and other items that spur the economy.
Begin with the sheer number of households in each economic class:
According to the Bureau of Labor Statistics, as of 2016, there are 125.82 million US households. The top 1% US upper class who would most benefit from the current tax relief being proposed by the US Congress represent 1.3 million of those households. A significant number, to be sure, but one that is dwarfed by the number of Americans considered to be middle class. According to the Pew Research Center approximately 51% ( 63 million middle class households) are classified in this group. Clearly and unarguably, tax relief focused FIRST on the middle class has a moreIMMEDIATE impact on a far greater number of citizens.
However, that is only one part of the equation. Trickle Down Economic Theory suggests that by providing the greatest amount of tax relief also allows the wealthiest 1.3 million households to spend more, which, in turn, trickles down to the middle class because jobs are ultimately created by the expenditures of the wealthier group. In short, the theory suggests that wealthy households will spend more if given more tax relief. The problem with this theory is both that history does not bear out the hypothesis and again, the reality is self-evident. This is because providing additional wealth to a wealthy person presumes that any number of thousands of dollars in additional spending power will motivate a wealthy person to spend more. But consider: the wealthy currently have sufficient surplus wealth to spend on whatever they might want. What's holding back a wealthy person from buying a new car or a new refrigerator or taking a vacation to a neighboring state is not lack of money.
On the other hand, many of the 63 million American households who are members of the middle class do not currently have surplus resources to spend on all of the items listed above. This is self-evident and can be evidenced empirically and anecdotally. By focusing tax relief on those 63 million middle class households, it is far more likely many will opt for a new car or refrigerator, or take a vacation in a neighboring state that they might not have otherwise taken.
If Congress is sincere in its desire to provide tax relief as a stimulus to the US economy, then it should spur economic growth by focusing on the 63 million American households who have largely been left behind in this economy.. The American middle class has waited patiently and in vain for 40 years to feel any significant impact of trickle down economics. It's time the "Splash the Middle Class" economic theory was employed. The result will be a tsunami of economic activity and shared prosperity the likes of which this country has never seen.
America who will be the most motivated to spend a significant portion of any tax relief they would receive.
WILL spend the money that results from tax relief on things like new cars, refrigerators, home improvement and other items that spur the economy.
