Spenders vs. Savers

Arnold Kling has an interesting thought experiment over at his new digs:

Suppose that Lois Lender and Sammy Spender work at identical jobs, earning identical incomes. However, Sammy spends all his earnings, while Lois saves 20 percent of hers. Do you think that Lois should pay more in taxes than Sammy, as happens when we treat interest, dividends, and capital gains as income?

I find a few flaws in the answers he gives but I think it’s an interesting question nonetheless and provides a bit of insight into the national conversation.

61 comments… add one

  • I can blather with the best of them, and more to the point.

  • If you take capital gains too low, it releases a lot “ambitious” money, without anything to back it up. The investments become bad, like speculative housing.

  • The loan rate should be higher.

  • “Investment” means something.

  • Drew “invests”.

  • I’m not so sure about Romney.

  • My husband wanted me to see $100,000 out of the condominium. That won’t happen.

  • Ethics are screwed.

  • How’s that, Uncle Dave?

  • “Tramps, like us, Baby we were born to run.”

  • How’s the plumbing going, TB?

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