I feel like I can't avoid the elephant in the blogosphere, which is Todd Henderson's writeup about how he's "super rich" yet really doesn't feel that way.
"We pay about $15,000 in property taxes, about half of which goes to fund public education in Chicago. Since we care the education of our three children, this means we also have to pay to send them to private school. My wife has school loans of nearly $250,000 and I do too, although becoming a lawyer is significantly cheaper. We try to invest in our retirement by putting some money in the stock market, something that these days sounds like a patriotic act. Our account isn’t worth much, and is worth a lot less than it used to be.
Like most working Americans, insurance, doctors’ bills, utilities, two cars, daycare, groceries, gasoline, cell phones, and cable TV (no movie channels) round out our monthly expenses. We also have someone who cuts our grass, cleans our house, and watches our new baby so we can both work outside the home. At the end of all this, we have less than a few hundred dollars per month of discretionary income. We occasionally eat out but with a baby sitter, these nights take a toll on our budget. Life in America is wonderful, but expensive.
If our taxes rise significantly, as they seem likely to, we can cut back on some things. The (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total. But more importantly, what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions? Ask the entrepreneurs we employ and the new arrivals they employ in turn whether they prefer to work for us or get a government handout."
Now, there are a few very important things to note here. First of all, Henderson isn't "whining," as some commentators have described him. He's not claiming that he has some entitlement to his big fat house, his two cars, his dining out, his housekeeper, or his landscaper. He's not asking anyone to feel sorry for him, or saying that he "deserves" these things. What he's saying is simply that he spends most of the money he makes, and thus, if he has to pay more in taxes, he'll have to cut expenses, which will make every merchant who currently receives a share of his spending worse off.
Basically, I take him to be saying that trickle down economics is very real for him, even though he's considered "rich." For me, the point isn't about how "rich" someone is, it's about how much money that person spends relative to what they make. Trickle down economics works only if the people with the money SPEND the money, thus allowing it to trickle down. (And I think lots of people would say that trickle down economics in general doesn't work well at all - that's not really an argument I'm interested in having)
In other words, if someone makes $10mm a year and spends $1mm, then the claim "If you raise my taxes, I'll spend less, and everyone will be worse off," isn't nearly as credible as if Todd Henderson, making somewhere in the neighborhood of, let's say $350k, and spending most of his post-tax dollars makes the same claim. That's what I took Henderson's point to be - that even though he's considered "rich," he doesn't have surplus funds to pay higher taxes with - and that higher taxes will impair his spending.
It should also be noted that this same argument can translate to someone who makes much more than Henderson. Richie Rich could earn $10mm a year, and spend all that money, and still have to cut back if his taxes are raised. I think my readers are smart enough to understand that my argument is not that Richie Rich needs to build his $10mm house, or drive a $100k car - my point is merely that if you take more of Richie Rich's money (which he's spending almost all of) via taxes, then he will have to change his spending patterns, and the guy who sells him the $100k car will suffer, as will the guys that are building his $10mm house, and the companies that make the fixtures in his $10mm house, and the restaurants where he no longer spends so much money every week, etc etc etc.