How Higher Taxes Hurt The Middle Class

Higher taxes have other consequences that can also impact the lower and mid-range income brackets more than the wealthier people those taxes are supposedly aimed at. It's simple, really: When people have less money, they spend less money. That's less money spent on personal services, products, and luxury items. Anyone who has a job in sectors that sell expensive cars, boats, houses, or other sometimes luxurious items (in other words, anyone in manufacturing, retail, and construction industries) should want to have a large pool of people looking to buy. Sure it's fun to say that so-and-so doesn't need another jet. But if I make jet parts, work as a mechanic, own an airport hangar or am a pilot looking for a job I want there to be as many jets purchased by as many people as possible.

Higher taxes on investments also means fewer dollars spent investing as the reward starts to be less worth the risk. After all, why take the chance at losing already-taxed money when any returns on that investment are taxed at even higher rates? The purpose of low capital gains taxes is to encourage people to invest. Higher taxes means less investing. And that would hurt new or struggling businesses seeking financial backing. And taxing charitable donations at normal income rates would also reducethe amount of charitable giving. And who benefits the most from charitable giving? Let's just say not "the rich" who would simply just be forced to donate less.

Thought.Co