In the article, The Great Switch by the Super Rich, Robert Reich has made a very interesting point.

Forty years ago, wealthy Americans financed the U.S. government mainly through their tax payments. Today wealthy Americans finance the government mainly by lending it money. While foreigners own most of our national debt, over 40 percent is owned by Americans – mostly the very wealthy.

This great switch by the super rich – from paying the government taxes to lending the government money — has gone almost unnoticed. But it’s critical for understanding the budget predicament we’re now in. And for getting out of it.

By paying the rich to fund the government we are giving them an opportunity to make money without putting in any effort at productive economic activity.

This will kill the US economic competitiveness faster than any other economic policy that has been tried in our history.

Why not focus on the damage that this tax policy is causing to our economic health?

Just like grape vines make for better wine when they undergo a little stress, capitalists make for better economic growth when they have to work a little to make money.

For proof of this last point see my previous post, Higher Marginal Tax Rates Spur Economic Growth.