Deflation is bad for the economy, no doubt. We aren't in deflationary times though.
My issue with your whole argument is the underlying assumption that all rich people are not reinvesting. If I take your 4 trillion dollar number as true, taxing the rich to try and squeeze back on that 4 trillion will necessarily take valuable income from the rich that do reinvest and not take "enough" (per your standards) from those that save (is that really a bad thing?) will still have money put away. You will have taxed away 4 trillion dollars, but probably pulled 2 trillion out of circulation that is being reinvested -- I'm just making up numbers but you get the point.
And I think the "maximizing the effectiveness of the economy" argument is a real slippery slope. There are so many things that poor people do that further entrench them in poverty that certainly don't maximize the effectiveness of the economy. Should we stop those things as well? No more beer, cigarettes, toys bought from Walmart made in China, having kids they can't afford and automatically go on the government dole, etc?
Alright, let's just take all the money we can from rich people that is attributed to not being reinvested and not spent. That should do wonders for our economy. /sarcasm Teeray, I think you are quite smart but we will disagree on this forever. I do OK for myself. I have 8 employees, pay them all well. I get clobbered with taxes to the point that I have slowed down the growth of my business because of taxes. At one point in the year, my effective income tax rate goes to about 60% (cumulative state and fed income, not taking into account embedded taxes paid for in goods, property, sales taxes, etc.). Further tax hikes would bring about an intentional decision to not expand further, thus eliminating a handful of jobs that would otherwise be created. This isn't a strawman argument, this is a real life, exactly how it will play out scenario. You might argue that is OK, that the added taxes taken from me and then distributed to those in need outweigh the handful of jobs that would have otherwise been created. And you might be right, I don't know. And I might be right, and I think I can fairly say that you don't know. What I don't like is this "let's take it from the rich" approach that I see from many. How about we put the lower and lower middle class in a position where they can get ahead instead?
Income inequality is a very big deal in this country. The poor aren't getting richer and we should try to address that. I don't see how anyone can argue that. However, seizing more money from the rich, who already pay the overwhelming majority of taxes is not the way to do it. And, the income inequality gap has been widening exceptionally fast under Obama policies. Why is that? The overriding factor in increasing wages for lower income people is job placement. More jobs, leads to a shortage of labor, which leads to rising wages. Obama has had the double wahmmy of massive numbers of people leaving the work force all-together and increasing the cost of doing business for most businesses (you can queu up the complaints that this is Bush' fault if you like- the recession certainly started under his term). If if you want the income gap to shrink, you've got to do it by increasing wages to the poor while not also damaging the economy by trying to take or punish more from the rich. The rich are mostly business owners and any legislation you create that makes their tough job even tougher will just lead to more hardship for business, which is not good for the American worker.