First off the income tax is punitive so many who can hide money in capital gains will do so, because that is less stable than pure income the money will likely be held in limbo as a leverage thing. If the money were as fluid as say, pure income it would get spent.There is always a coorelation. As well, even after the earnings are taxed purchases then have their own taxes, this leads to a wait and see approach to spending. It's not as simple as A and B make C. This is a fallacy. It requires one to believe that there is a finite amount of economic potential and was magically shifted towards a "class" of people. In capitalist economic models anyone has access to the supply of money if they have the desire, ideas, initiative and a little luck to get there. What they do with their money is really no one else's business as long as it's legitimate. In bulk, yes. In theory, yes. In reality, no. The middle class are not the largest hiring class, the wealthy are; as well the wealthy buy the big items that require the higher salaried workers, it all functions as one large mechanism with many cogs. If one cog fails the whole system will suffer. When the wealthier among us have no confidence in hiring or buying the chain breaks down, thus the middle class shrinks. This is not the function of tax breaks. Debt responsibility cannot be regulated, consumerism drives that but not necessarily because they were given more back in taxes. If nothing else the loss of taxes in income versus the very American desire to improve one's life are the culprit. If people knew how much they truly lost in taxes they'd hang their senators, that said the notion of being promoted but not gaining economic traction drives debt based consumerism IMHO. But not due to tax cuts, due to an uncertain market. Which has become that way due to uncertainty over regulatory expansion and tax cut sunsets. There is no market confidence and it's political.
