Increasing taxes on the poor or the middle class or the rich is not a good idea at this time. The debate about raising taxes is heating up as several states including California, have tried to resist the temptation because of the negative effects on the economy.
Taxing the rich is not the answer and here is why;
The rich will not invest in new US businesses and instead will move their money to foreign markets. That will cause fewer jobs to be created.
The rich will wait for taxes to go down before claiming their income by delaying the sale of their assets. This is cause less taxes to be raised and reduce the liquidity of money as money is tied up for longer periods of time.
The rich will get more involved in politics and gain more influence to change monetary policies to protect their wealth.
Money Will Disappear
The rich will consider leaving the country or using foreign assets to protect their money from higher taxes. More money will begin leaving the country to end up in foreign banks.
Small Business Owners Will Stall
The rich that personally own small businesses will have no encouragement to grow, resulting in less hiring and perhaps more layoffs.
Lending To Slow
The rich will reduce their lending because they have no incentive to grow their business, causing banks to lose more money and further deepening the recession.
Buy Up Commodities
The rich will buy up commodities instead of growing their businesses, which will increase the cost of raw material, adding to the increase in prices and driving up inflation.