Quote:
Originally Posted by lew189
I think the tax money goes to the US Treasury and then the government spends it. After the government "does stuff with it," unless I'm misunderstanding the question, it is gone. Does this answer your question?
The correct answer is government spending stimulates demand. This is similar to how an increase in wages stimulates demand, demand is driven by the poor and working class. The spending of the poor and working class is very elastic based on conditions but the rich are going to invest most of their income anyway, making their spending very inelastic.