Startling revelations are coming in the debate over taxing the rich. Today on “Varney & Co.” Robert Frank of The Wall Street Journal said that wealthy people in the U.S. have not only been spending, but they’re also keeping the economy afloat.
“Wealthy people, which are 5% of the economy, now account for 37%, more than a third of our consumer economy,” Frank said. “The consumer economy is what drives America.”
And that huge piece of the economy may take a hit if the Bush tax cuts expire and taxes on the rich go up.
Frank said if taxes are raised on our highest earners, spending will be drastically reduced. Right now the top 5% spend about as much as the bottom 80% in our economy.
“These people have been our recovery,” Frank said. “If they stop spending, we’re toast.”
Frank also spoke on the need to balance cutting the deficit with the need to keep the rich spending. He said that, despite the need for fiscal responsibility down the road, the most important thing is to keep taxes low so that the rich keep on spending.
When it comes to raising taxes on the rich, according to Frank, only two words matter: “not now.”