When the rich buy expensive items in auctions...does this help the economy?

Question

Wouldn't it be better and more helpful to donate those millions to the poor?

Answer 1

You've phrased the question incorrectly. It should be, does it help the economy as much as hundreds of average people paying their rent? Anytime anyone spends money it stimulates the economy but when a rich person spends money, even on very expensive items, they're usually spending a much smaller percentage of their income than the average person spends. That means that much more of their wealth is stagnant, sitting in accounts collecting interest, but doing nothing to stimulate the economy. That's why tax breaks for the rich never really translate into economic benefits for the rest of us. They spend what they spend, and any tax breaks merely add to their bank accounts.

Tax breaks for the middle class are different, because the extra cash may mean they can now afford that second home, new car, computer, or even just new clothes for the kids. By definition, the rich have no such needs — they're rich!

Answer 2

Yes---taxes! Any time things are bought and sold it helps the economy. The person/company selling the item will usually in turn spend the money continuing the vicious cycle of capitalism. Also, as stated above, a lot of auctions donate some or all proceeds to charity.

Answer 3

Yes - every legitimate transaction helps the economy in some way.

In the UK if you buy at an auction you pay sales tax (VAT) on the sale. This money goes directly to the government.

The Auction House receives income from the sale (commission). They pay tax on their profits. They also use their income to employ other people who in turn pay income tax and insurance. They also occupy a building that might otherwise be empty and pay property taxes on their premises. In addition they use gas, electricity etc - all of which provides income for the energy suppliers and they too employ people and pay tax on their profits.

And round and round it goes !

Answer 4

People always seem to forget that the rich never stop giving to the poor...as they pay more taxes that the poor earn in their entire salary.

Without the rich...countries like Australia and France would not have a social security system.

However...America does not believe in helping poor people and do not have such a system in place.

Answer 5

Well, cutting defense spending in half and domating those billions to the poor would be even more helpful, yet you don't see it happen, do you?

To answer your question, purchases in auctions do not lead to creation of new goods and services and thus do absolutely noithing for the ecomony. People who sell in auctions, however, can use the proceeds for something productive...

Answer 6

No. They are considered a private sale (or secondary) and that is not part of the GDP calculation. If the proceeds go to some great cause then it will benefit someon but most likely the economy will never see this type of transaction.

Answer 7

no this does not help the economy at all.
and yes it would help to donate to the poor!!

Answer 8

it helps the economy because greater amount of money circulates. so the dollar velocity increases, increasing transactions and consumption, thus increasring production.
Consumption and production are two sides of the same coin

Answer 9

They already do.

But the real answer to your question is:

Money is like manure. It doesn't do anyone any good unless
you spread it around.

MERRY CHRISTMAS and have a nice day.

Thank you very much, while you're up!!

Answer 10

Really Rich people give a lot of money to charities...I'm sure of it.

So let them have their fun with auctions