I'm Confused

Brad DeLong, Alex Tabarrok, Steve Landsburg and Elizabeth Lesly Stevens are all talking about Robert Kendrick, the heir to the $84 million Schlage Lock Company fortune.  Stevens is recommending that people like Robert Kendrick, who doesn't appear to do anything all day except move a few cars from parking space to parking space, should be taxed more, because the idle rich don't contribute to society.  Landsburg and Tabarrok are arguing that the man can't be taxed because he doesn't consume anything.  DeLong says his estate can be taxed. 

I know these guys are trying to say that the government is crowding into the private sector and hurting the economy.  Landsburg makes the case that if the government takes the money from Kendrick's bank account, then the bank can't make loans to small businesses and so on. 

Let me come at this from a different angle.  Kendrick probably has his money tied up in stocks and bonds.  He may be making scads of money on dividends from those stocks, which until 2003 was taxed as regular income.  Assuming Kendrick's unearned income is greater than what the 15% income tax rate hits, he was paying more money in taxes before the dividend tax cut in 2003.  After that tax cut, many businesses increased the amount of money they paid out in dividends, and decreased the amount they reinvested in their businesses, thus creating fewer jobs. 

In the meantime, the Bush tax cuts increased the size of the U.S. budget deficit.  According to the same economists who say that taxing Kendrick and increasing government spending will cause others to consume less, government deficits crowd out business borrowing, thus doing the same thing.  I'm confused.  If the government has to spend less to lessen the deficit, than people like Kendrick need to consume more.  But we've been told he won't.  This seems to me like a weak point in the argument. 

If Kendrick's unearned income were to be taxed at a higher rate, wouldn't the government  receive more money, decrease the deficit or increase transfer payments, and not crowd out business spending, if there was enough private demand for credit?  If the government were to transfer that money to poor people who would consume with that money, wouldn't that also be a good thing?  Then, that money shifts from one bank account (Hendrick's) to another (the business person's who the poor person bought from) with little overhead (IRS, HHS, etc.), and there is still money in the bank with which to originate loans. 

I would think that after watching the banks hand out trillions in bad loans, a person wouldn't make the case that taxing someone will be a bad thing for the economy because banks can't loan as much money if they do.  It is pretty clear that banks printed a lot of money in the bubble heyday, because that is what the fractional reserve banking system does.  That was considered a good thing by neoclassical economists, but when the Fed does the same thing, bad.  I'm confused.