Quote Originally Posted by Xiahou View Post
Because a significant number of them live in a fantasy world where tax hikes in a stagnant economy are a good idea.
The logic behind that is that lower taxes compel firms to invest and take on more workers. This is not strictly accurate. Although it allows firms to take on more workers, it does not compel firms to take on more workers. The reason that unemployment is so high and growth is so low at the minute is because firms in the States were able to lay off huge amounts of workforce whilst experiencing huge productivity gains by forcing the remaining workers to work harder better faster stronger for fewer and longer. These productivity gains have allowed firms to stay in the black as demand has plummeted; indeed, many firms are now sitting on lots of liquidity which they could choose to expand their business with.

But they haven't! This is because demand has not yet expanded enough to compel firms to expand supply to meet that increased demand. Low taxes aren't doing enough to keep demand up (And, as an aside, all the gains in living standards tha Americans should have from lower taxes are offset by pricier healthcare than the rest of the world). Whilst tax hikes might at first glance seem to reduce demand yet further, this is not necessarily the case. The marginal propensity to consume of the super-rich is low; if you're poor and you get a tenner, you're more likely to go out and spend it immediately than a rich person is. Likewise, taking a tenner off a poor person is more likely to affect their consumption than it is the rich person. By taxing the rich (who, as has been said, are often sitting on piles of cash as well as having done very well over the past decade), in order to redistribute to the poor (E.g. studies have shown that food stamps and unemployment benefit are the single most effective means of increasing wealth in the economy, per $ spent by the government) demand can be increased, and the deficit can be brought down.