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Re: Trickle Down Economics
Missy, I would highly encourage reading Thomas Sowell's paper on Trickle Down Economics. I really think it might be enlightening.
I am sad you think it is immoral, I don't believe that anything which would get more middle income people working is immoral.
Yeah, I still don't get it.
I feel like if it worked that well under previous administrations, we would have never strayed from it.
this works for me. it would be a lot less complicated for sure. I know this recession has made me and DH look at our finances a lot differently. We have spent less for sure. I think even if the economy comes booming back, we will still spend less. we will actually be able to save more.
I would also recommend reading up on the Laffer Curve.
http://en.wikipedia.org/wiki/Laffer_curve
Economics isn't always intuitive. Perhaps this will clarify.
I won't claim to be an expert in economics...but I have a business degree from Xavier University Cincinnati and took many many classes on the subject.
Economics is a guessing game. It's an abstract. It's not absolute in any respect.
All we can see is what has worked in the past, but that doesn't mean that it will work in the future.
True, and one must take other aspects of the economy into account. For example one of the reasons things were so good under Clinton is because of the tech boom. And then under Bush he had the dot com bubble, as well as 9/11.
What my main concern today is the government spending. A nation with 16 Trillion is debt is scary. I believe it weakens us a nation and we have to make some very serious changes to reign it in. I want my kids to live in a better society than I did and I fear, if left unchecked, they will be saddled with a debt that cannot be overcome.
Our kids will be living in a different economic society, that's for sure. A society where home ownership is no longer an indication of success and where Social Security is not really an option.
401ks might even go away if they continue to fail the way they have been.
It's not the debt that scares me. It's the increasing economic and financial gap between the haves and the have nots that scare me.
Just for the fun of it, my Alma matter XU started the American Dream Index/Survey. I think it is interesting as I was raised believing the American Dream was home ownership and it is (according to this study) no longer the case.
http://www.xavier.edu/americandream/programs/documents/Final-American-Dream-Survey-PowerPoint.pdf
i have the same fears, but I just don't think the answer is making the rich richer and the poor poorer. It does t work for me. A huge number of wealthy people made their fortunes on the back of the rest of the citizenry. Whether we use their products, stay at their hotels, eat in their restaraunts, drive their cars, or simply work our butts off to keep their business afloat, it IS a colaboration.
I just don't agree that the middle and lower classes should be the ones to step out on faith, while the upper class has the guaranteed benefit. No.
But he says basically the same thing as you've been saying, yes? And basically you guys are saying, "this is going to work!" I just disagree. I think there is very real evidence that it doesn't work. To me it's like saying that we should deregulate the mortgage industry and just trust that they will regulate themselves. Did that work out well?
I simply do not trust the entire premise the trickle down theory is based on. And I don't think my family should be the ones to carry an undue burden so the rich can maybe invest in this country. If a business had a mandatory reinvestment percentage tied to a tax break I might think differently.
If you make $200,000 a year, you get $16,666 a month and 15% in taxes would be $2499 a month, leaving you with $14,166 a month. Let's face it, that's plenty to live on. You might have to give up some luxuries, but you're not going to have to choose between dinner and paying your electric bill.
If you make $20,000 a year, you make $1,666 a month, and your taxes would be $250 a month, leaving you with $1,416 a month. Is that really enough to live on? At $1,666 a month, losing $250 means giving up necessities, like food or keeping the lights on.That's why a flat tax is a terrible, terrible idea. It's hardly "fair share."
Except that it WOULDN'T get more middle income people working. That's the whole point of this thread. It doesn't work.
I don't believe it is about make the rich richer and the poor poorer. I am sorry if that is all you took from the information. I believe it is more about freeing up capital, stimulating the economy and creating jobs.
I just don't believe stimulus spending is the answer. We are already in debt up to our eyeballs in this country and then we have Ben Bernanke devaluing the dollar with all the quantitative easing and monetizing our debt which has not done much to stimulate the economy.
Well I respectfully disagree. I believe it will get people back to work and has been used successfully to do just that.
Ways to fix our economy:
1. End the war on drugs
2. End the wars in other parts of the world.
3. Tax the richest of the rich at a higher tax rate than the rest of us. If they can't afford their third summer home, sucks to be them and they should learn to budget more wisely. Perhaps Dave Ramsay could help.
4. If any tax cuts are created for corporations, there must be caveats written in that any money saved by said companies must be used to hire new employees at a competative pay grade.
When has it been used successfully to do that? When has lowering taxes on the rich raised the employment and wages of the middle and lower class?
I guess I just don't see how you trust so completely that it would get back to the people. Especially after all the reactionary firings in the days following the election. To me that proved the selfishness of corporate America and made me even more sure that the lower classes would get the shaft and the wealthy would benefit.
Exactly. Why do people want to reward the greedy, selfish corporations? I think we can look to Papa John as to what happens when the rich get richer.
aka "Job creators".
Except those numbers still won't add up. The top 1% make more than $500,000 a year while the average household income is ~$44,000 a year.
44,000 x 150 people at 20% = $1,320,000
500,000 x 100 people at 25% = $12,500,000
Congratulations, you were only off by $11,180,000! The second number is only 9.47 times bigger than the first number. This is, of course, presuming that these new jobs aren't in fast food or retail where people are going to be making minimum wage.
It also makes absolutely no sense to tax people equally. The single mother making $30,000 a year needs every single penny to scrape by, while the couple making half a million bucks a year absolutely does not. The first person deserves to be able to feed, clothe, provide shelter for herself and her kids, etc. The second couple won't fail to meet their basic needs even if they gave up half that money to taxes because they would still be making more than five times the average salary. They might not be able to put quite as much towards their new car of vacation, but taxing somebody with that much money won't negatively impact their standard of living.
Secretary of the Treasury Andrew Mellon pointed out that, under the high income tax rates at the end of the Woodrow Wilson administration in 1921, vast sums of money had been put into tax shelters such as tax-exempt municipal bonds, instead of being invested in the private economy, where this money would create more output, incomes and jobs.
What actually followed the cuts in tax rates in the 1920s were rising
output, rising employment to produce that output, rising incomes as a
result and rising tax revenues for the government because of the
rising incomes, even though the tax rates had been lowered. Another
consequence was that people in higher income brackets not only paid a
larger total amount of taxes, but a higher percentage of all taxes, after
what have been called ?tax cuts for the rich.? There were somewhat
similar results in later years after high tax rates were cut during the John
F. Kennedy, Ronald Reagan and George W. Bush administrations.
After the 1920s tax cuts, it was not simply that investors? incomes rose but that this was now taxable income, since the lower tax rates made it profitable for investors to get higher returns by investing outside of tax shelters.The facts are unmistakably plain, for those who bother to check the facts. In 1921, when the tax rate on people making over $100,000 a year was 73 percent, the federal government collected a little over $700 million in income taxes, of which 30 percent was paid by those making over $100,000. By 1929, after a series of tax rate reductions had cut the tax rate to 24 percent on those making over $100,000, the federal government collected more than a billion dollars in income taxes, of which 65 percent was collected from those making over $100,000.
http://www.tsowell.com/images/Hoover%20Proof.pdf
Wait, what was it that happened in 1929 and for the next decade? It was economic prosperity for the middle and lower classes, right?
No, you are misinterpreting the analogy. It is an apples to apples comparison so:
44,000 x 150 people at 20% = $1,320,000
44,000 x 100 people at 25% = $1,100,000
The more people you have in the workforce, the more revenue comes through to the government in the form of income taxes.
But what about The Great Depression, Cincy?
ETA: Not to mention that everyone can agree the world is a totally different place than it was 80 years ago. A global marketplace in which to spend and make money. We have so many examples of greedy corporate America that simply can't be ignored just to make the math work.
Here's another thing that resulted from the 1920s tax cuts on the rich: the highest income inequality that this country had for a century.
http://www.slate.com/articles/news_and_politics/the_great_divergence/features/2010/the_united_states_of_inequality/introducing_the_great_divergence.html
To be fair, all of the rich people who benefited from those tax cuts DID put their money back in the system... you know, when they lost it all and took everyone down with them.
The Great Depression also (IIRC) resulted in the closest the US ever got to true socialism: The Alphabet Soup Programs.
Where, you know, the government created jobs for the citizenry so the middle and lower classes could buy things like food.
Economists and politicians still argue about what caused the Great Depression. I just think that is a convenient cop out and it could easily be noted the policies under the Coolidge and Hoover administrations were more relevant to the cause of the Great Depression. You can't forget other issues that led to the Great Depression, agricultural overproduction, overextension of credit, anemic foreign trade and farm disaster and debt.