To reduce unemployment, should we lower taxes on the wealthy or stimulate consumer spending?

Reducing taxes on the hitherto tax-favored higher bracket would free up money that might be used to invest. That would be a good thing.

Businesses, however, won’t add jobs just because capital is plentiful. They won’t add jobs unless they feel that revenues will go up.

And revenues won’t go up unless consumer spending — almost 70 percent of the economy — goes up.

Middle-class consumers, however, are worried about jobs and existing debt and are in no mood to boost the economy.

So a stimulus won’t come from either lowering takes on the rich or putting reduced taxes in the hands of the middle class.

Why not put more money in the hands of those most likely to spend it — the lower-earning among us?

Invite the states to reduce sales taxes and replace lost state revenues with funds generated by increased income taxes on those who have benefited from preferential tax treatment in the past.

Should work.

Powers McGuire


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