How Cutting Taxes Makes Life Worse for the Rich
- 6 years ago
How Cutting Taxes Makes Life Worse for the Rich
And when we recall examples of actual events that left us with less money — think home fires, job losses, business downturns, divorces, serious illnesses
and the like — in almost every case, it really was more difficult for us to buy things we wanted.
Imagine that you are a wealthy car enthusiast facing two options: Driving a Porsche 911 Turbo (purchase price: less than $160,000) on well-maintained
highways, or driving a Ferrari F12 Berlinetta (purchase price: more than $320,000) on roads riddled with foot-deep potholes.
Because virtually every human evaluation depends on context, the category of goods whose accessibility
depends overwhelmingly on relative purchasing power is far broader than might appear.
Taxes affect absolute purchasing power, not relative purchasing power.
And when we recall examples of actual events that left us with less money — think home fires, job losses, business downturns, divorces, serious illnesses
and the like — in almost every case, it really was more difficult for us to buy things we wanted.
Imagine that you are a wealthy car enthusiast facing two options: Driving a Porsche 911 Turbo (purchase price: less than $160,000) on well-maintained
highways, or driving a Ferrari F12 Berlinetta (purchase price: more than $320,000) on roads riddled with foot-deep potholes.
Because virtually every human evaluation depends on context, the category of goods whose accessibility
depends overwhelmingly on relative purchasing power is far broader than might appear.
Taxes affect absolute purchasing power, not relative purchasing power.