Trinkledown theory- A failing theory?

[Skeptic90]

The final nail in the supply side coffin - How the World Works - Salon.com

Excerpt: The theory of supply-side economics tells us that if you cut taxes on rich people and corporations, the newly liberated moguls and businessmen will take their windfall and invest it, creating jobs and accelerating the rate of economic growth. The benefits of a light hand on the upper class, therefore, will "trickle down" to the working man and woman.

Taxes are low and corporate profits are high, but nothing is tinkling down to the American worker.

 

[Shesapeach]

If you get an unexpected check in the mail for $500, what do YOU do with it?

Do you rip it up or do you cash it and spend it?

Does the economy benefit when people spend or when people don't spend?

It's not that difficult to figure out.

If the government levied a $500 tax on you, you have $500 LESS of your own money to spend because the government reached into YOUR pocket and TOOK IT! That's $500 of your earnings that the government took from you, that you can't spend on what you want or need.

When people have money, they spend it which stimulates the economy.

When people don't have money due to taxation, there's nothing to spend, and the economy stagnates.

If you own a business and suddenly they lift the tax burden and you now have thousands of extra dollars, as the business owner, do you use those extra thousands to grow your business by purchasing equipment or hiring workers? OF COURSE!

 

[Defensor Fidei]

The final nail in the supply side coffin - How the World Works - Salon.com

Excerpt: The theory of supply-side economics tells us that if you cut taxes on rich people and corporations, the newly liberated moguls and businessmen will take their windfall and invest it, creating jobs and accelerating the rate of economic growth. The benefits of a light hand on the upper class, therefore, will "trickle down" to the working man and woman.

Taxes are low and corporate profits are high, but nothing is tinkling down to the American worker.

What, you don't feel that trickle-down coming down upon your head from the super-rich? You mean it's not money that's actually been trickling down on us? :o

 

[Shesapeach]

The final nail in the supply side coffin - How the World Works - Salon.com

Excerpt: The theory of supply-side economics tells us that if you cut taxes on rich people and corporations, the newly liberated moguls and businessmen will take their windfall and invest it, creating jobs and accelerating the rate of economic growth. The benefits of a light hand on the upper class, therefore, will "trickle down" to the working man and woman.

Taxes are low and corporate profits are high, but nothing is tinkling down to the American worker.

Right now, large corporations and local governments are concerned about the major tax that's going to be levied as a result of Obamacare and in this sorry economic climate, they are preparing for the worst.

Heck, if you, as an individual, don't have health insurance, a MAJOR TAX is going to be levied on YOU, personally.

People know what's coming and in this economy, preparation is everything.

If I had a business that had employees, where I now had to provide a specified amount of healthcare coverage for every employee or face government taxes/penalties, I'd be looking at my books and the economy and deciding if I can afford to even stay in business.

As a business owner, in this economy, knowing what taxes and penalties are coming under Obamacare mandate, I'd either have to get rid of some employees to stay in business or go out of business completely.

That's what overarching government does to business and how government is killing the economy.

 

[Defensor Fidei]

If you get an unexpected check in the mail for $500, what do YOU do with it?

Do you rip it up or do you cash it and spend it?

Does the economy benefit when people spend or when people don't spend?

If you are poor or middle class, you will go out and spend that check and stimulate the economy. Each extra dollar of that $500 would have great value to you if you're living from paycheck to paycheck.

If you are the super-rich, the tax cuts are just going to fatten your bankbook. You already had enough money to buy whatever you were going to buy (or hire whomever you were going to hire). A $500 check would mean nothing to you.


That's why we need tax cuts for the poor and middle class, not for the super-rich as Bush implemented and Obama extended.

 

[Anovah]

If you get an unexpected check in the mail for $500, what do YOU do with it?

Do you rip it up or do you cash it and spend it?

If I'm a billionare, I stow it away in the bank.

 

[Anovah]

Gah! Def beat me to it

 

[Shesapeach]

If you are poor or middle class, you will go out and spend that check and stimulate the economy. Each extra dollar of that $500 would have great value to you if you're living from paycheck to paycheck.

If you are the super-rich, the tax cuts are just going to fatten your bankbook. You already had enough money to buy whatever you were going to buy (or hire whomever you were going to hire). A $500 check would mean nothing to you.


That's why we need tax cuts for the poor and middle class, not for the super-rich as Bush implemented and Obama extended.

Most people in America, including business owners, are not RICH or even "super-rich". Most people in America who are business owners are middle class. And yes, if a person who makes less than $250,000 per year gets a tax break, meaning they don't have to pay taxes (some or all), they are going to spend it which will stimulate the economy.

98.5 % of this nation make $249,000 or less per year. Only 1.5% make over $250,000. IT says that is 1,699,000 households that make over $250,000 per year. That means there are about 150,000,000 households in this nation that make less that $250,000 per year.

Household income in the United States - Wikipedia, the free encyclopedia

If I'm a billionare, I stow it away in the bank.

There aren't many billionaires in America, Anovah.

They certainly aren't getting any tax breaks if they are.

 

[Skeptic90]

If you get an unexpected check in the mail for $500, what do YOU do with it?
Do you rip it up or do you cash it and spend it?

Depends on how much money I have. Me being a poor college student, I will use it on my necessities like books, food, and other sorts like that. I have no luxury money.

Now if I had a bunch loads of money, this new earned money, I will try to invest it. Lets say I am a toy maker for some large corporation. As a business student, the one thing my business professors have thought me is that I must increase shareholders wealth. The largest part of business expenditure comes from labor. I must pay for the workers wages, at least at minimum wage, I need to pay for their insurance, which is about quarter of their wages, and their retirement plans.

As a MIS major, my job in a few years is to create systems which will probably lay off many people. Say in a toy division, half of my workers make plastic molds. Me seeing an inefficiency there, I would probably make a machine replacing those workers with a machine that does it twice as fast and in 2 years, it will recover my investment costs. Another part of my firm, say my phone support people, I will ship those jobs overseas, where I can hire 5 people instead of one here.

Right now the U.S economy is not doing so great, but I am looking at great opportunities overseas. Developing countries in china and india are a great place for me to kick start my new toy chain.

If I was stuck in the U.S, it wouldn't make sense to invest now into the U.S economy because the returns are not that great. Corporations like bank of america and Intel know this. About $2 trillions worth of earnings are being unused. That's a fact. Companies pile up cash but remain hesitant to add jobs
They aren't sitting on the cash. They are using the cash to pay down debts, buy up competitors, lobby politicians, invest in hedge funds, etc. This is not 'productive capital'. It does not create jobs or infrastructure or anything real. It is simply money making more money for those that have it and have access to the structures of the financial system.

Does the economy benefit when people spend or when people don't spend?

Yes the U.S economy benefits if its being spent on new jobs in the US. But the second fact is that corporations are not in need of more workers. They already have a bunch of baby-boomers who will not retire, because they can't afford it. In the 80's, old folk retired once they hit 55-65. But now, we see these boomers staying in their jobs, because they didn't save enough retirement money or they didn't have a great retirement plan after all these unions were destroyed back in the 80's.

Now the economy cannot jump started by qualified young workers because the boomers are still sitting on our desks.

When people have money, they spend it which stimulates the economy.

When people don't have money due to taxation, there's nothing to spend, and the economy stagnates.

If you own a business and suddenly they lift the tax burden and you now have thousands of extra dollars, as the business owner, do you use those extra thousands to grow your business by purchasing equipment or hiring workers? OF COURSE!

I would agree with you with bottom, middle class individuals, or small businesses, but this is not happening with the large corporations who own 70% of the wealth.

 

[KarateCowboy]

I prefer laissez-faire economics.

 

[Shesapeach]

Depends on how much money I have. Me being a poor college student, I will use it on my necessities like books, food, and other sorts like that. I have no luxury money.

Now if I had a bunch loads of money, this new earned money, I will try to invest it. Lets say I am a toy maker for some large corporation. As a business student, the one thing my business professors have thought me is that I must increase shareholders wealth. The largest part of business expenditure comes from labor. I must pay for the workers wages, at least at minimum wage, I need to pay for their insurance, which is about quarter of their wages, and their retirement plans.

As a MIS major, my job in a few years is to create systems which will probably lay off many people. Say in a toy division, half of my workers make plastic molds. Me seeing an inefficiency there, I would probably make a machine replacing those workers with a machine that does it twice as fast and in 2 years, it will recover my investment costs. Another part of my firm, say my phone support people, I will ship those jobs overseas, where I can hire 5 people instead of one here.

Right now the U.S economy is not doing so great, but I am looking at great opportunities overseas. Developing countries in china and india are a great place for me to kick start my new toy chain.

If I was stuck in the U.S, it wouldn't make sense to invest now into the U.S economy because the returns are not that great. Corporations like bank of america and Intel know this. About $2 trillions worth of earnings are being unused. That's a fact. Companies pile up cash but remain hesitant to add jobs
They aren't sitting on the cash. They are using the cash to pay down debts, buy up competitors, lobby politicians, invest in hedge funds, etc. This is not 'productive capital'. It does not create jobs or infrastructure or anything real. It is simply money making more money for those that have it and have access to the structures of the financial system.

Sure, but there is such a thing as morals and business ethics. You can run a company the way you described or you can think outside the box.

Yes the U.S economy benefits if its being spent on new jobs in the US. But the second fact is that corporations are not in need of more workers. They already have a bunch of baby-boomers who will not retire, because they can't afford it. In the 80's, old folk retired once they hit 55-65. But now, we see these boomers staying in their jobs, because they didn't save enough retirement money or they didn't have a great retirement plan after all these unions were destroyed back in the 80's.

Now the economy cannot jump started by qualified young workers because the boomers are still sitting on our desks.

Every man in America, regardless of age, deserves to earn his living. Boomers aren't "sitting on your desks". Make your own desk! Who is stopping you?

I would agree with you with bottom, middle class individuals, or small businesses, but this is not happening with the large corporations who own 70% of the wealth.

Large corporations are in bed with the government.

 

[Skeptic90]

Right now, large corporations and local governments are concerned about the major tax that's going to be levied as a result of Obamacare and in this sorry economic climate, they are preparing for the worst.

Heck, if you, as an individual, don't have health insurance, a MAJOR TAX is going to be levied on YOU, personally.

People know what's coming and in this economy, preparation is everything.

If I had a business that had employees, where I now had to provide a specified amount of healthcare coverage for every employee or face government taxes/penalties, I'd be looking at my books and the economy and deciding if I can afford to even stay in business.

As a business owner, in this economy, knowing what taxes and penalties are coming under Obamacare mandate, I'd either have to get rid of some employees to stay in business or go out of business completely.

That's what overarching government does to business and how government is killing the economy.

This Obamacare will actually help small businesses expand. Instead of them having to purchase from a single location, they will be able pool them together and create exchanges. Tax breaks and credits to individuals and small businesses will be given. You can see the full details of this in Sec. 1421 of the Affordable care act.

Here is the general rule of that section which I copy and pasted below:

PART II—SMALL BUSINESS TAX CREDIT
SEC. 1421. CREDIT FOR EMPLOYEE HEALTH INSURANCE EXPENSES
OF SMALL BUSINESSES.
(a) IN GENERAL.—Subpart D of part IV of subchapter A of
chapter 1 of the Internal Revenue Code of 1986 (relating to business-
H.R.3590—120
related credits) is amended by inserting after section 45Q the fol-
lowing:
‘‘SEC. 45R. EMPLOYEE HEALTH INSURANCE EXPENSES OF SMALL
EMPLOYERS.
‘‘(a) GENERAL RULE.—For purposes of section 38, in the case
of an eligible small employer, the small employer health insurance
credit determined under this section for any taxable year in the
credit period is the amount determined under subsection (b).
‘‘(b) HEALTH INSURANCE CREDIT AMOUNT.—Subject to sub-
section (c), the amount determined under this subsection with
respect to any eligible small employer is equal to 50 percent (35
percent in the case of a tax-exempt eligible small employer) of
the lesser of—
‘‘(1) the aggregate amount of nonelective contributions the
employer made on behalf of its employees during the taxable
year under the arrangement described in subsection (d)(4) for
premiums for qualified health plans offered by the employer
to its employees through an Exchange, or
‘‘(2) the aggregate amount of nonelective contributions
which the employer would have made during the taxable year
under the arrangement if each employee taken into account
under paragraph (1) had enrolled in a qualified health plan
which had a premium equal to the average premium (as deter-
mined by the Secretary of Health and Human Services) for
the small group market in the rating area in which the
employee enrolls for coverage.

I may be wrong. If so, I will like to see some sources that back up your claims.

Also don't make the 902 page text scare you. There is a table of contents that guide you to the parts that you want to hear. Also its about the size of a harry potter book. Link: http://democrats.senate.gov/pdfs/reform/patient-protection-affordable-care-act-as-passed.pdf

 

[Skeptic90]

Sure, but there is such a thing as morals and business ethics. You can run a company the way you described or you can think outside the box.

I have already taken my business ethics class, and 2 other ethics classes on top of that. Although it may be unethical in the views of the american worker, in the shoes of a CEO, I think is ethical. I am taking one job away to make 5, and I am keeping the shareholders happy. This is not just the U.S, we need to think in a global scale. This brings a more philosophical question. Is the life of one american worth the same as one chinese or one ukranian?

Every man in America, regardless of age, deserves to earn his living. Boomers aren't "sitting on your desks". Make your own desk! Who is stopping you?

Very easy to say that. I would also agree with you if it was realistic. 9 out of 10 businesses fail during its first 2 years of operations. Altough I can get on my high horse and say that wont happen to me, and I am an American, and I have a dream. But if I want to be realistic, I will join in the ranks of some large corporations, unless I come out with some genius one of the lifetime idea that I can actually afford.

Corporations can squash my small business, by either buying me out, or making things really uncomfortable. Thats another thing I learned from my law class. Send them some paper work, and sooner and later they will just 'disappear'. Its live or die. Taking out the competition is what we live for in the us.

Large corporations are in bed with the government.

Yeah pretty much.

 

[Skeptic90]

I prefer laissez-faire economics.

I would have agreed with you about 2 years ago, but as I have studied more and more the world economy, this hand-off policy doesn't benefit the society as a whole.

 

[blueapplepaste]

Trickle down economics is an utter failure. You can try and spin it all you want, but the numbers don't support the idea behind it. Plain and simple.

All lower taxes for the rich has done is to actually trickle wealth up and concentrate it such that a smaller portion of the population own a larger piece of the pie.

 

[JBJoe]

When people have money, they spend it which stimulates the economy.

When people don't have money due to taxation, there's nothing to spend, and the economy stagnates.

If you own a business and suddenly they lift the tax burden and you now have thousands of extra dollars, as the business owner, do you use those extra thousands to grow your business by purchasing equipment or hiring workers? OF COURSE!

This is an incredibly naive point of view. Did you really think this one through? REALLY? The costs of doing business are tax deductible. You don't have thousands of extra dollars to purchase equipment or hire more workers because of low taxes, that's just plain dumb. Either you have the money BEFORE TAXES or you do not. The tax rate doesn't matter here and we've had top marginal tax rates above 75% and the economy grew because business owners were spending the money on the business rather than let the government tax that money.

The reason higher taxes on the wealthy works is because in order to avoid paying taxes on that money they have to spend it rather than put it in the bank. You use arguments like "when people spend money" when in reality it isn't "people spending money" that grows the economy it's money being spent. When you grow the income gap you end up with ultra-rich who no longer need to spend as much money because lack of money is driving wages down which means less total money spent which causes the economy to stagnate.

 

[Shesapeach]

This is an incredibly naive point of view. Did you really think this one through? REALLY? The costs of doing business are tax deductible. You don't have thousands of extra dollars to purchase equipment or hire more workers because of low taxes, that's just plain dumb. Either you have the money BEFORE TAXES or you do not. The tax rate doesn't matter here and we've had top marginal tax rates above 75% and the economy grew because business owners were spending the money on the business rather than let the government tax that money.

The reason higher taxes on the wealthy works is because in order to avoid paying taxes on that money they have to spend it rather than put it in the bank. You use arguments like "when people spend money" when in reality it isn't "people spending money" that grows the economy it's money being spent. When you grow the income gap you end up with ultra-rich who no longer need to spend as much money because lack of money is driving wages down which means less total money spent which causes the economy to stagnate.

That's absurd. The "ultra-rich" are already paying 35% income tax while 1/2 this country pays none after government allowances and deductions. That doesn't include the additional percentage the "ultra-rich" pay in state income tax.

Tax Brackets (Federal Income Tax Rates) 2000 through 2011

Equal justice under the law would be a flat tax, where everyone pays taxes, not just the wealthy.

The liberal ideology creates a class of people dependent on the government and penalizes those who do well.

 

[blueapplepaste]

That's absurd. The "ultra-rich" are already paying 35% income tax while 1/2 this country pays none after government allowances and deductions. That doesn't include the additional percentage the "ultra-rich" pay in state income tax.

Tax Brackets (Federal Income Tax Rates) 2000 through 2011

Equal justice under the law would be a flat tax, where everyone pays taxes, not just the wealthy.

The liberal ideology creates a class of people dependent on the government and penalizes those who do well.

*sigh* The same ol' rehashed arguments over and over and over again with little basis in reality.

Take a look at this: The Truth About Taxes

 

[oldbetang]

If I'm a billionare, I stow it away in the bank.

You would if the choice was between getting paid interest on it or risking it in business when the government would just end up taking 70% of what you made.

 

[oldbetang]

*sigh* The same ol' rehashed arguments over and over and over again with little basis in reality.

Take a look at this: The Truth About Taxes

Uh..David Kay Johnson? Didn't he essentially label Paul Ryan as a terrorist? Should we be taking this guy seriously?