Friday, November 19, 2010

What Will the Rich Do With Their Tax Cuts? - The Wealth Report - WSJ

What Will the Rich Do With Their Tax Cuts? - The Wealth Report - WSJ

Outgoing Florida Congressman Alan Grayson, the firebrand Democrat, gave an entertaining presentation on the House floor recently explaining what the rich would do with their “Bush tax cuts.”

Rep. Grayson’s flip-board show ended up sounding more like a holiday gift guide for millionaires.

According to Mr. Grayson, who lost his bid for re-election, the top 1% of American earners will receive an average “tax cut” (though it is actually a nonincrease) of $83,347 each. He says the rich could use the money to buy each of the following, every year:

* A Mercedes Benz E-Class–cost $83,000. He said the tax cuts would allow the rich to buy a new one every year and give their old one away. “Not just once. But every year for the next decade, they would have enough money to buy a Mercedes Benz.”

* Hermes Birkin Bag — cost $64,800.

* A bottle of 1787 Chateau d’Yquem, which would still leave $25,000 of loose change in their pocket.”

* Grey Poupon. “They could buy 20,000 jars of their favorite mustard,” he said.

* Cigars. They could buy “800 luxury cigars and light each one with a $100 bill.” They afford to do this twice a day, he says.

Mr. Grayson, of course, is trading on stereotypes. But his analysis reflects one of the core contradictions of the Democratic Party’s view of tax cuts. On the one hand, Democrats say the rich will simply hoard their tax cut, rather than spending them in ways that would help the economy. Now on the other hand, they say the rich will go on a shopping spree for Birkin bags and mustard.

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