According to top Washington insiders, there is a push to enact a tax cut targeted towards the rich. Essentially, Obama seeks to bring back the financial plan enacted by Clinton officials a decade and more ago. Under this framework, couple's with a household income exceeding $250,000 would receive a yearly tax cut of approximately $6,000 which nationally would equate to what the author referred to as "a $700 billion gift over the next decade." The philosophy behind this is that since the poor spend nearly all of their income, giving them tax cuts wouldn't invigorate the economy. However, the rich would be more likely to spend this tax cut money and re-invest into the economy thus helping the nation out of the current recession.
The only question I have is, Does NO ONE in Washington remember what happened during the Reagan era?
Giving the poor tax cuts is actually precisely what would reinvigorate the economy. Lower income households have a higher marginal propensity to consume, so any additional disposable given them will go back into the economy. An extra $6,000 for someone who earns $250,000 is negligible and is unlikely to be spent. Thus, such a tax cut would do little to nothing for the economy.
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