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Re: Trickle Down Economics
No no no, you can't do that! Put your money back into the market so it can continue to trickle on down! Haven't you been paying attention?
Oh, people save after a recession?
*scratches head*
Not if people are making less money. Lets use single people with no dependents and no deductions as an example because they're easy to work with. Let's go off the numbers on this site: http://us.thetaxcalculator.net/
If you are making under $10,000 a year you are only going to pay around $590 in taxes. If your income is $44,000 a year you will pay $7188.50 in taxes, but the first ten thousand would still only be taxed $590. This is still true if you make a million dollars a year: $590 taxed on your first ten grand.
If you make half a million dollars you would have paid $160,222.70. Let's compare this to the average of $44,000, where a person only pays $7188.50 in taxes. The first number is 22.29 times higher than the second, although the income is only 11.36 times more. This means the government is making approximately twice as much on taxing the top 1% vs the average Joe. You would need to double the number of average Joes working to equal the number of very rich people.
Obviously your revenue from income tax will go up if more people are working. However, especially when looking at places like Applebee's or Papa John's, where their employees won't be making anywhere near $44,000 a year (which is actually the average household income, not individual, although I have been using it here). In fact, the average Applebee's server $17,000 a year (source: http://www.careerleak.com/salaries/applebees/server/). They would then pay $1685.50 in taxes a year. If the owner made half a million a year (low-balling it, clearly), he would need to have 100 employees to have them equal the same tax revenue as his salary alone.
It can't be apples to apples when things aren't equal. Somebody making more will pay significantly more income tax to somebody working for minimum wage and therefore need dozens, hundreds, or even thousands of employees to balance them out. (For example, store franchise owners would pay exponentially more than any of their employees. Even adding up their employees taxes, owners may be a greater source of revenue than the average Joes.)
On another note, you and others have said that isn't fair and that everybody should be taxed the same amount. Somebody used 15% as an example. If we were taxing people that way, these would be our new incomes and amount of income taxes:
$500,000 = $75,000
$44,000 = $6,600
$10,000 = $1,500
Look at how the numbers have skewed. The rich guy is now paying less than half of his original taxes while the poor person is now down to $8,500 a year. It is the poor person who is getting screwed by this.
You know, I would say that I saw an example of trickle-down economics at play while living in NYC about six years ago. Fund managers were making gazillions, and spending their multi-million dollar bonuses buying penthouse apartments, dining out at Per Se and Jitneying to the Hamptons. And that was good, right? I mean, they were creating a market for expensive goods, and new companies were popping up to sell them all sorts of products and services.
The problem was two-fold. One issue was inflation. The middle class was effectively priced out. The standard of living didn't go up across the board.
The other, of course, is that whole thing was a house of cards. Trickle down economics, while a good idea in theory, makes for bad policy. Businesses are designed to make money for investors NOT to create jobs. It's almost Darwinian, because there are necessarily winners and losers. But the government also has a role in protecting vulnerable populations beyond just making money.
I'm not saying that tax cuts caused the Great Depression. But they certainly didn't prevent it.
Missy, I appreciate the respectful debate. I think it is important to note that unethical rich people are always going to find ways to (legally) evade paying taxes regardless of the tax rate. But not all rich people are of that mindset and to tax someone making over $250K is not only going to affect those super rich people but will also affect those small business owners who may have an LLC and would love to be able to grow their business but cannot due to the current fiscal policies and economy.
My DH is in the trades, he has many friends (a plumber, tile setter and HVAC technician) who are in this situation, small business owners, who are not super rich but will be affected by the tax increases. These are the job creators who would benefit from the lower tax rates and not necessarily the Warren Buffets of the world.
we starting to save right now, but i'm in hopes that we can save more when the economy gets better. I don't want to blow all our money on useless things, when I would rather save for retirement. just my 2 cents
we starting to save right now, but i'm in hopes that we can save more when the economy gets better. I don't want to blow all our money on useless things, when I would rather save for retirement. just my 2 cents
Interesting. I bet CEOs of large corporations feel the same way as you. It's too bad their employees seem to be useless to them, though.
Duplicate post. Stupid Nest.
We just keep going round and round because of the same thing - I don't think that those business owners would automatically turn round and grow their business by creating new jobs, and you just blindly trust (all evidence to the contrary, I might add), that they will. And the entire trickle down premise is based on the assumption that they will - even though many have been shown to lay off workers when doing well (Papa Johns), or simply proceed at the same production levels and pocket all extra profit. Of course not all will do that..but you can't base an economic plan on the cross your fingers hope that the majority won't.
Let's just agree to disagree.
With my nonexistent economics background (okay, I had one class in college about international economics specifically designed for non-Econ majors), I just feel that a lot of economic theories are incredibly difficult to apply and fit in an age when we have a global economy where not everyone plays by the same economic rules... and in an age where responsibility to the consumers and to the employees must (rightly so) come before the responsibility to let the business operate however they wish. It's great that we have workplace safety regulations and minimum wage, and maternity leave and child labor laws... but that's also what makes it so much cheaper to ship production to places that don't. How can someone advocate absolutist, one-size-fits-all views in such a situation?
yes but the difference is we are not CEOs, but I don't doubt it. I've never really been fans of CEOs
That's kinda of a broad blanket statement. What do you mean you aren't a fan of CEOs?
Not snarky, I just don't quite get what you mean.
I agree!
I would agree with this statement too.
Missy, I think you are getting hung up on the whole Tax Cuts for the Rich thing. I would like to see everybody get tax cuts which would work to stimulate the economy in two ways:
1) The small business owners would have freed up capital to invest and grow their business (true, not every business will... but I do believe it would help the small business owners).
2) If taxes are lowered on the middle class this frees more discretionary income to spend which helps business to grow.
Set aside tax cuts for a moment and look at the theory of supply side economics.
http://en.wikipedia.org/wiki/Supply_side_economics
I just think it makes more sense to allow the market to decide what businesses succeed or fail and not the government.
Take for instance, Solyndra, which received $500 million in loan guarantees from the government. Solyndra closed its doors on 9/1/2011, filed for bankruptcy, laid off all their employees and left the taxpayers with a $500 million loss.
I don't believe the government should be in the business of picking the winners and losers of private enterprise.