A good tax system (like the flat tax) does not impose extra layers of tax on income that is saved and invested.
I’ve tried to emphasize this point with a flowchart, and I’ve defended so-called trickle-down economics, which is nothing more than the common-sense notion that investment boosts wages for workers by making them more productive.
But if you doubt this relationship, just take a look at this chart posted by Steve Landsburg.
(H/T: Cafe Hayek)
That’s an amazingly powerful relationship. Wages for workers are very much tied to the amount of capital that’s invested. In other words, capitalists are the best friends of workers.
Something to think about with the President proposing big increases in the double taxation of capital gains. And something to consider since he wants America to have the highest level of dividend double taxation in the industrialized world.
