MasterPo says: This blog is about topics and issues that are of importance to me. I am not one of the countless blogging lemmings that are tripping over each other scurrying down the hill and off the cliff of blogging oblivion trying to write the greatest blog on the latest topic de'jour. Your comments are welcome.

March 17, 2009

The "Rich" Are Consumers Too!! (or So What Do You Think They Spend It On?!)

Taxing the "rich" is all the vogue now. As of writing this my esteemed Sen. Chuck Schumer is promising to tax at 91% the bonuses that AIG executives are to be paid (based on an employment contract – more about those in another article). I suppose that's rather charitable given that I have heard others want the bonuses 100% taxed!!

(My advice to the AIG execs: Take the bonus money and put it into a muni bond money market. If you have to pay it back in taxes at least you'll get some return on it you can keep!)

But this begs the question:

What do you think the "rich" – defined anyway you want – do with the money they earn??

This is a very serious and important question.

I know a lot of liberals and young people read my blog, both of which rarely make a lot of money, and they think the "rich" are all about caviar holidays, Champaign dreams, lifestyles of the famous, etc etc.

Put the images of people like Donald Trump and Paris Hilton out of your thoughts. While they are "rich" they are celebrities. The lives of truly "rich" people are nothing like that.

Tell me: What do you think the "rich" do with their money?

I think they buy things with it.

They buy food, transportation, housing, medical care, clothing, entertainment, vacations, repairs and maintenance, and so on. Maybe not the kinds of things you would buy – and more to the point the kinds of things you want them to buy – but they do buy. And someone has to provide those goods and services they buy. In other words, they stimulate the economy!

And yes the do pay taxes. Maybe not as much as you think they should be paying but they do. There are just so many deductions, write-offs, credits etc one can take.

So tell me: What do you think the "rich" do with their money?

I really want to know.

Post your replies and let's find out!

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Darwin's Finance (also EverydayFinance) said...

Right on!
It's so easy to envy "those rich jerks", especially when the media panders to the populist whims. All this feigned outrage over the AIG bonuses? What a joke. Where was Treasury at the last $30 Billion mile marker a few weeks back? They didn't think to link bonus provisions to the latest funding? And Stewart beating up Cramer? The best he could do was blidnside him with a video from 2006? Cramer's not responsible for the current economic crisis, but in playing to the lowest denominator's emotions, it furthers the cycle of populist rage.

MasterPo said...

Thanks for your comments.

The point I am trying to make is "the rich" spend their money on products and services that stimulate the economy too. So what if they buy lobster instead of McDonalds, Porche instead of Geo, a custom suit instead of something at JC Penny's etc. Someone still has to provide those products and services and therefore makes his/her living from these "rich" people.

Mr. ToughMoneyLove said...

Thanks for saying what many of us have been thinking. The wealthy not only spend, they are part "working families" which so many pundits seem to forget.

MasterPo said...

You're welcome.

And it's all true. I dare anyone to prove me wrong!

Unless "the rich" are literally stuffing the mattress with cash or truly burning it then anything they buy with the money helps to stimulate the economy.

As I've always said: You can't have a strong, prosperous economy based solely (or mostly) on providing just the basics of life to the masses.