Posted on 11/17/2017 11:33:17 PM PST by Olog-hai
Does money roll downhill?
In their drive to cut taxes, President Donald Trump and congressional Republicans are betting it does.
Behind their legislation is a theory long popular among conservatives: Slash taxes for corporations and rich people, who will then hire, invest and profit — and cause money to trickle into the pockets of ordinary Americans. The White House says the plan’s corporate tax cut alone would eventually raise average household incomes by $4,000 a year.
The tax plan’s “trickle-down” approach was popularized in the 1980s during the Reagan administration, though it dates back at least to a 1932 wisecrack by Will Rogers. And history shows it has a spotty record of delivering on its promises.
The Republicans’ latest version of the approach edged closer to the finish line Thursday when the House passed its form of the bill; the Senate is working on its own. Republicans hope to send final legislation to Trump by Christmas, though it’s unclear whether they can succeed by then.
Among the key planks in their legislation: Shrink the corporate tax rate to 20 percent from 35 percent. End or ease the inheritance tax on the wealthiest estates. Cut taxes on business partnerships. Offer a temporary tax cut on corporate profits held abroad. Repeal the alternative minimum tax on very high earners. And reduce personal income tax rates for many. …
(Excerpt) Read more at hosted.ap.org ...
“...trickle down...”
I hate that phrase. Far more accurate: The rising tide (more money available for business and employment) lifts all boats.
To debunk the trickle down theory, one must explain how a “trickle up” approach would work economically. How people without capital or with limited capital can stimulate economic activity. Pelosi, for example, said a few years ago that unemployment checks stimulated the economy. She’s an economic illiterate and was appropriately mocked.
Those would be things I wouldn't have done *without* that extra $$$.
Rather than “trickle down”, it’s more accurate to say that if you lower taxes on investment, you get more people deciding to invest rather than spend. Starting a business is hard work. You’re more likely to put in that work if you think your returns, once it turns a profit, won’t be taxed away.
V = GDP / M - where...
GDP - Gross Domestic Product
M - the Money Supply hopefully a constant unless you print more than to just replace worn out re-tired currency
V - Velocity of Money, or number of times money changes hands in commerce transactions
If people have more dollars & the spend it GDP goes up as does Tax revenue related to all the increased GDP activity with sales tax, more jobs, and payroll taxes
Typical drivel from ignorant leftist who has no clue about the difference between money and wealth. It warrants no further reading (so I didn't).
Money is simply printed paper distributed by a government. It can be "rolled" in any direction from inflation to scarcity, to anyone the government chooses to send it to, all determined by government policy.
Wealth is entirely different. Wealth can be created in copious amounts out of out of nothing but raw materials and hard work. This is done simply by producing something that has more value when completed, than the cost of producing it. Government policies that stop PREVENTING the generation of NEW wealth, improve the standard of living of everyone involved in it's production. If something improves YOUR standard of living you should care little how "rich" someone else is.
Just another two bit liar. It's getting boring.
> If people have more dollars <
That’s the rub. Social benefits are paid by the Treasury from taxpayer receipts. Taking a dollar from the taxpayer, and transferring that dollar to others through unemployment benefits, etc. is a zero sum game. If you take a dollar from your left pocket, and place it in your right pocket, it’s not a transaction (GDP) it’s a transfer. (keeping your exception that money isn’t being printed)
Correct! You move $1 from one pocket to another and generate Zero wealth.
What’s worse is when social benefits (unemployment, etc) are paid from borrowed (debt) funds. That’s transferring funds from your grandkids pocket to yours (involuntary). It’s immoral, bad policy, and disrupts the civil society.
I’m a big believer in spending your own money, not other people’s money.
Doesn't matter what you call it, it will still fail as long as people continue to 'invest' in China and Mexico and buy from those same places...
> These people are liars! <
Porkulis was about jobs, jobs, jobs.
Cash 4 Clunkers was about jobs, jobs, jobs.
Obamacare was about jobs, jobs, jobs.
Solyndra was about green jobs, jobs, jobs.
Recovery Summer was about jobs, jobs, jobs.
Recovery Summer II, III was about jobs, jobs, jobs.
If government masterminds could really “manage” the means of production and economic activity, Venezuela would be paradise on Earth.
“...warrants no further reading(so I didn’t)...”
hehehe full disclosure- I quit reading as soon as I saw the words trickle down.
Thanks for your great post about the difference between money and wealth.
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