Archive for October 5th, 2011

Raise the Taxes on the Ultra Rich

When the current administration took office it was focused on increasing the taxes on corporations and closing the tax loop-holes that multi-national corporations used to avoid paying taxes here in the United States. One of the unfortunate side affects of this change was that some of the largest multi-national corporations decided to move their headquarters outside of the United States. Another side affect of all the tax talks surrounding the corporate tax code is that corporations decided to increase the amount of cash on hand so that when the tax changes were made they would have the necessary funds to cover their new tax liability.

Now the talk is really heating up about increasing the taxes on the Ultra Rich (the Millionaires and Billionaires) in the US. The majority of the Ultra Rich make their money through investments. These investments provide large sums of capital to businesses which in turn use the capital for research and development, expansion, increased production, etc… So will we begin to see some of the same changes that we saw with corporations over the last two years begin to happen with the Ultra Rich? Will the Ultra Rich begin to increase the amount of money they hold in cash and other low risk alternatives? Will the Ultra Rich decide that it is time to retire and or move out of the United States? Either of these alternatives would reduce the amount of capital available for corporate America to invest in growth.

So if the Ultra Rich do decide to reduce the amount of money they invest in corporate America that will have a harmful affect on our economy. Whether you like the idea of increasing the taxes on the Ultra Rich or not, the impact of what the Ultra Rich do with their wealth could have a significant impact on all US citizens. How will their decisions impact you?