So this leaves us with the question: What happens to the money if the wealthy get to keep it? It’s easy to imagine that those funds would get consumed on luxuries and lavish excesses that “two-percenters” could easily forgo to give their less fortunate brethren a helping hand. There’s no doubt that some of the spending that ensues would fall into this category. Meanwhile, quite a bit of this money would also get risked to generate even more income.
The wealthiest Americans are the ones who truly have disposable income, money they can risk without jeopardizing their livelihood. These are the folks who seed venture capital funds that in turn finance startups like Facebook, Twitter, Groupon and others that eventually evolve into industry icons and become stable generators of well-paying jobs.
This is one of the phenomena that helped to fuel the ’90s boom. Venture capitalists poured money into startups at an astounding rate. An estimated 6 million jobs were created by about $273 billion in venture capital funding during the 1990s, especially from 1995 to 2000.
The tax impasse comes down to a trade-off between handing over about $1.5 trillion over the next decade to the government to consume on programs or leaving the money to the investment decisions of the people who earned it in the first place.
It’s a trade-off between leaving the money management to people who have already proved that they have a knack for generating wealth versus delegating it to bureaucrats who might not have any practical experience with risking money to generate a return.
Which would you choose?
B.A. Marbue Brown is the author of “The Clinton Economic Boom (and Other Myths of the Clinton Presidency).” He is currently a senior director with a Fortune 50 technology firm.
Vice President Joe Biden waits to conduct a mock swearing-in ceremony with Sen. Brian Schatz, D-Hawaii, in the Capitol's Old Senate Chamber, December 2, 2014. Schatz was sworn in to serve the remainder of his term since he was appointed to the seat after Sen. Daniel Inouye, D-Hawaii, passed away.