Maybe they’ll tip better?
Voyager:
What makes you say that? Are private jets trivial? Yachts? Luxury cars? Expanded mansions, or summer homes? Designer clothes? High-end restaurant meals?
There are many valid criticisms of trickle-down. But “magic” it ain’t.
Right, because saying the poor should eat rice and beans is exactly the same as accusing someone of advocating child molestation.
The words you put in my mouth are slander, sir. The worst I accused you of is being heartless - you have accused me of being a criminal.
The wealthy already have those thngs, and tax cuts will not increase their purchase of more. It is magical thinking to conclude they are waiting on tax cuts to finally buy those designer clothes they have been seeing on TV.
Well, to be fair, they might buy more designer clothes, but you’re right, they have plenty of cash regardless of tax rates, so it’s unlikely that a change in tax policy will affect their purchasing patterns in any meaningful way.
Also, in the long run it’s probably better for the economy if a few million middle-class people can afford to buy houses instead of renting than for a handful of billionaires to buy luxury yachts or private jets.
What happens after the middle-class folks have all spent their $1,000? The economy gets a boost for a couple of weeks, but how do we keep it going?
The money is in circulation in the economy. It has not just disappeared the same way as it would if another person had just stuffed it in a Swiss bank account.
One persons spending is somebody else’s income. Each step gets smaller. But as the money is spent it continues to spur demand and provide income. It is income over and over.
Please study Keynesian economic theory and get back to us.
Short version–as long as no one is saving it in a cash reserve, the economic boost keeps happening. It’s like magic.
You think they can’t afford a luxury car now? Or a plane? Or clothes? Some people are at the point where money is no object, and where they have everything they want. I’m not rich, but there is pretty much nothing I want that I can’t afford now. In fact, when I just got a big bonus it all went into my investment account because there was nothing I needed or wanted to buy. This is definitely true for the very small percentage we’re talking about here.
As I said, if there was a shortage of investment money, it might make sense. But the wiki in trickle down theory doesn’t even mention consumer purchases, as far as I noticed, and for good reason.
Not every rich person is Bill Gates. Some people who fall into high tax brackets might, if their paycheck contained an extra few grand due to lower taxes, decide they can finally afford the mortgage on a vacation home or the payments on a luxury car or boat or membership to a country club or other rich-people-type stuff.
And many middle class people might, if their paycheck contained an extra few grand due to lower taxes, decide they can finally afford the mortgage on a regular house.
That’s true too. I don’t recall that trickle-down theory was ever ONLY about the rich. It’s simply that, by virtue of paying taxes at the highest rates (and that on higher amounts), they’re the biggest beneficiaries of trickle-down theories put into action.
Then your recollection is wrong. Trickle-down is all about the wealthy. That’s why it’s called trickle-down. Cut taxes on the wealthy, that will spur economic growth that trickles down to the lower classes. If it’s proponents believed you could get the same benefit from cutting taxes for the middle or lower classes, it wouldn’t be called trickle-down since it wouldn’t be trickling down, it’d be trickling in all directions. To trickle-down it must come from the top, by definition.
How much in savings do you think the average person in a high bracket has? I’d bet quite a bit - that is wealth versus income. Sure there are a few rich people who bump up against their incomes every year in spending, but I’d suspect it is very few. Do you really think the existence nitwits who spend whatever they make is reason to starve the government so our bridges fall down, our children go hungry, hurricane damage does not get fixed, our soldiers, sailors and airmen go into battle with inadequate equipment, our libraries close, and our teachers have to buy their own stuff?
If the middle class gets laid off and are about to lose a home, they are irresponsible. If the upper class is unable to buy a second home due to gluttony, give them tax cuts and steal bread from the mouths of the poor.
We’re generally not talking about people who get “an extra few grand”
The Economic Growth and Tax Relief Reconciliation Act of 2001 lowered the top rate from 39.6% to 35% (for income over approx $300,000)
This means that someone with income of 1 million dollars was getting $32,000/annum additional.
And this does not take into account the lowering of capital gains from 10% to 8%, Accelerated credits, changes to what was meant by “qualified dividends” (taxed at a favorable rate), and a great increase in the estate tax unified credit exclusion. All of these tended to favor the very, very wealthy.
In part because of these changes, Warren Buffett is paying a lower percentage of his income towards federal taxes than his secretary. This is not right.
Strange but trickle up also benefits the wealthy. When we had a 90 percent tax rate on the wealthy, we still had millionaires. When we were at 70, still lots of millionaires.
When the money is in the hands of the poorer people it works its way up to the rich anyway. It comes through increased demand and more business opportunities. They still make money.
But when the rich, who already have lots of money get more, it does not trickle down. It get stashed in offshore banks, foreign vacation homes and does not circulate at all like putting it in the hands of the people who would immediately spend it.
You know what? I think I’ve been conflating “trickle-down” with “supply-side.”
Same thing.
Trickle-down and supply-side are the same thing. They are based on two concepts. First, that what benefits the wealthy benefits everyone. Second, that the non-wealthy are stupid enough to believe this.
But the wealthy are an important part of the economy. They can more readily invest in economic growth, and in many circumstances do a better job at it than the public can through government. But they don’t do that for altruistic reasons. Government can provide the incentive for the wealthy to make such investments. Government can also make independant investments that aid economic growth.
The answer to the OP is: The government is the job creator. Without government there are only enough jobs to sustain the wealthy in a two-tier society. Government is the driving force to maintain a system that is beneficial to everyone. That’s why the wealthy hate government.
I have no explanation for why non-wealthy people are stupid enough to believe that trickle-down and supply-side economics.will benefit them.