kaya'08
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Trickle down economics doesn't work without social values.
You gotta create a society that rich people want to invest in. Otherwise, they won't invest in it.
Create a bunch of cultural relativist losers, and rich people just go, "Yea.........."
Rich people only invest where they see a nice size potential profit. They don't make that decision based upon cultural values. The society that rich people want to invest in is the one where they can make a lot of money. Ever wonder why rich people don't open stores in Africa? Because people in Africa have limited money to spend in the stores. Rich people always go where the money is.
Rich people only invest where they see a nice size potential profit. They don't make that decision based upon cultural values. The society that rich people want to invest in is the one where they can make a lot of money. Ever wonder why rich people don't open stores in Africa? Because people in Africa have limited money to spend in the stores. Rich people always go where the money is.
Since every time we make a purchase, a larger portion of our money flows up, than which flows back to us (the profit portion), money tends to trickle up and pool. Without the "unnatural" redistribution mechanisms, more money will always trickle up than what trickles down, so our economy is a "trickle up" economy, not a trickle down economy. You can't apply economic concepts for one type of economy, to a totally different system and expect results.
Everything I've read says that we've got ****loads of money for investment that people are just sitting on. All the really good investments have more than enough people looking to put their money into them. We can afford to lose a bit of that surplus via increasing their taxes. Especially if we take those collected tax dollars and then invest them in infrastructure improvements that the private sector would otherwise leave fallow.Mach said:If in the U.S. the majority "cultural value" is to heavily tax the wealthy.
Then if the wealthy only invest where they see a nice size potential profit
And taxes are factored into that profit.
Conclusion, given other reasonable investment alternatives (be it loopholes or other countries), they will switch those investments as a result of "Cultural values".
Mach said:And thus if the culture of the economy they are in has a stable, relatively free market, it's almost always better to invest in that market rather than sit on that pool of money. And when there is business investment, in an otherwise fertile business climate, there is economic growth. And when there is economic growth, there are more jobs, higher incomes, more competition, more opportunity. There is likely some ideal balance between the two. Any parent I would think gets this without trying. We provide a safety net for our children, but we don't keep spending on them to the point they are spoiled, or have not incentive to work and grow on their own. Well, most of us recognize we shouldn't.
Here is why in "trickle down" the trickle doesn't happen...
Every time that an "average joe" like myself makes a purchase, we pay a "rich tax", in addition to any government taxes. If I purchase a new TV, the store makes a profit, and the owners of the store, whether it is shareholders or "mom and pop", get that profit. Now while there is nothing wrong with that, and thats the way that a capitalistic free market is supposed to work, but most shareholders and business owners tend to be more wealthy than the median wage earner. So in a way, the profit that is added to the cost of the purchase is effectively a private tax that goes to the wealthy. Then when the tv manufacturer sells to the store, the same effect happens, and when the trucking company is paid, the same effect happens. This rich tax is on virtually every product that we purchase.
There are only a few natural mechanisms for redistributing that rich tax. One is the income that the rich pay their workers, another is the consumption that the rich engage in (which part their expenditures they get back because they get the rich tax portion), and the third is death (which typically only results in transfering the pooled wealth to another individual(s) rather than distributing it among the populas). The other mechanism, the "unnatural" one, would be a progressive income tax, death tax, and/or wealth tax.
Since every time we make a purchase, a larger portion of our money flows up, than which flows back to us (the profit portion), money tends to trickle up and pool. Without the "unnatural" redistribution mechanisms, more money will always trickle up than what trickles down, so our economy is a "trickle up" economy, not a trickle down economy. You can't apply economic concepts for one type of economy, to a totally different system and expect results.
Reducing taxes on the wealth only serve to reduce any trickle down, it doesn't increase trickle down. Likewise, conservatives keep complaining about the 49% that don't pay any income tax. I would assume that they would prefer it if we taxed the poor and working poor more, and the rich less. Again, redistributing the meager incomes of the poor and working poor to the rich is trickle up, not trickle down.
If we really wanted to increase the trickle down effect, we would tax the rich more and the poor/working poor and middle class less. While conservatives believe that would reduce what trickles down, thats a falicy because we have a net trickle up economy. Increasing taxes on the rich, and decreasing taxes on the non-rich would result in a forced trickle down, with the trickle actually coming from the taxation. So why would we want to "harm" the job creators (rich)? Because if we had a forced trickle down (more progressive taxation), the middle class would be more well rewarded for their labor, thus they would have an incentive to produce more, and an incentive to purchase more, and the rich would be just as rich because they would recieve more of the profits (tax) that they place on every item sold (because they would sell more).
But surely by taxing the rich more, they will merely pass on those costs to the consumers? So in a way it will be the middle class who end up paying the tax.
You are contradicting yourself.
To the OP:[/B]
Tax policy should not primarily be about "how to grow or slow the economy". Taxation is primarily about funding government.
Everything I've read says that we've got ****loads of money for investment that people are just sitting on. All the really good investments have more than enough people looking to put their money into them. We can afford to lose a bit of that surplus via increasing their taxes. Especially if we take those collected tax dollars and then invest them in infrastructure improvements that the private sector would otherwise leave fallow.
The problem is that things don't appear to otherwise be a fertile business climate due to diminished consumer demand. Diminished demand which is only exaggerated by choosing to take our tax dollars from the people with the highest propensity to spend it, as opposed to those with the least propensity to spend it.
The idea of "Trickle down economics" is idiotic because it has at its core that people and markets are rational. People are not rational and markets are certainly not rational these days. People and markets are too easily manipulated (/wave LIBOR) and that has never been really taken into account while making these economic theories.
The person with a billion dollars can only consume so much so he/she has to either put the money under that mattress or in a bank/investment company or invest directly in a company. Now then this money in theory would be used to invest and create jobs and "spread the wealth down". Well as we all know, that aint happening even remotely now days. Banks are not lending, companies are not spending (and have trillions in savings) and investment companies are cheating and lying their asses off to get a profit..all in the while screwing over the "average" man/woman, while making the rich investor much richer. So any "trickle" that there in theory could be from the guy with a billion dollars, is basically stopped at the next level and never reaches the people that need it the most.
Now one can say that we live in exceptional times, and they would be right. But if we look at the empirical evidence of the last 30 years, ever since Reagan and Thatcher brought "Trickle down economics" to the table, then we can see that the whole policy has utterly failed. The rich have gotten richer and the middle class and poor have not seen anywhere near the same income growth.. in fact quite the opposite. On top of that, thanks to policies from these "Trickle down economics" people, the masses are in big debt since that was the only way during the last decade to have any sort of income growth... more personal debt.
The idea of "Trickle down" economics is that the 1 billion invested by a rich person, should become more while it trickles down and help people in all society. The reality is the the 1 billion actually shrinks considerably so in the end what is left is next to nothing.
Nope; reasonably sure its because their coffers are filling up faster than the opportune investments present themselves. We should raise taxes to discourage the amassing of such non-productive wealth in the first place and to increase the opportunity cost of just sitting on it.Do you wonder why the people with cash to invest are not investing it? Why has the most risk friendly population in the history of civilization stopped taking risks?
I think its because all the low hanging fruits have long since been plucked and Trickle Down policies have been eating the seed stock.I think it's because the game has been rigged and the risks are suddenly greater than the potential rewards. Our Federal Government delights in saying things like they want to kill the first people they see to make and example to that they are putting their boot on the throat of business people.
The ears these words fall on are not deaf.
I, and I suspect you, don't understand what you are saying.
Reagan's idea was to make the web of laws and the climate for business friendly to those who want to invest and to allow a reasonable opportunity to those with investment capital to get a decent return if they risked it.
Today's administration refers to working in private business as "working behind enemy lines" and their approach to business is to strip away the profits, change to read reward, and increase the legal penalty, change to read risk.
The risk/reward equation in today's business has effectively ended entrepreneurial investment.
In Reagan's vision, the size of the pie was growing. His actions promoted that vision. In Obama's vision, the pie is shrinking. His actions are promoting that vision.
Self fulfilling prophecies it seems.
You're missing the point entirely. You are trying to cut up a pie that is shrinking so that those who are in need will get a piece of it before it's gone.
The goal is to have a pie that is increasing. Right now, today, compared to the same date four years ago, there are about 3.5 fewer Americans with jobs. That is YOUR shrinking pie.
The question should not be who is entitled to receive the shrinking pieces, but why is the pie shrinking.
The reason is that the folks who have the cash to invest are terrified to do so. Do you think that it's a coincidence that the most risk friendly nation of Capitalists in the history of civilization, US, all stopped investing at the same time and are now sitting on 3 Trillion dollars of capital rather than investing it? What is the overriding thing that is terrorizing them? Not a trick question. Just something for you to ponder.
So how is it the middle class are earning more in the US/UK and living better lifestyles then they ever where in the previous decades?
Nope; reasonably sure its because their coffers are filling up faster than the opportune investments present themselves. We should raise taxes to discourage the amassing of such non-productive wealth in the first place and to increase the opportunity cost of just sitting on it.
I think its because all the low hanging fruits have long since been plucked and Trickle Down policies have been eating the seed stock.
You're missing the point entirely. You are trying to cut up a pie that is shrinking so that those who are in need will get a piece of it before it's gone.
The goal is to have a pie that is increasing. Right now, today, compared to the same date four years ago, there are about 3.5 fewer Americans with jobs. That is YOUR shrinking pie.
The question should not be who is entitled to receive the shrinking pieces, but why is the pie shrinking.
The reason is that the folks who have the cash to invest are terrified to do so. Do you think that it's a coincidence that the most risk friendly nation of Capitalists in the history of civilization, US, all stopped investing at the same time and are now sitting on 3 Trillion dollars of capital rather than investing it? What is the overriding thing that is terrorizing them? Not a trick question. Just something for you to ponder.
But surely by taxing the rich more, they will merely pass on those costs to the consumers? So in a way it will be the middle class who end up paying the tax.
Yes, and he did that by lowering taxes for the rich... you know, "those with investment capital" and deregulate the markets (thats good and bad). That has since continued under both Dem and GOP leadership to the extreme and this extreme in the end caused the economic meltdown that we are now in.
That has nothing to do with the subject. What today's administration does or does not do, is in large part due to the abuses of business .. bankers and financial institutions, and the need to fix that problem. Like it or not, taxes on capital and corporations have never been lower.
Horse****. The abuse by bankers and financial investment firms has put in the system a huge risk premium that still is not fixed. Banks are NOT LENDING. This in turn means people cut back because they constantly listen to the doom and gloom and see friends fired, so there is no consumption (which is a huge part of the economy), which means business dont need as many people because no one is buying. Not that business could get loans or credit to fund an expansion any ways. It is an evil circle, that all started with lax enforcement of regulation, lax regulation as a whole and lazzie-faire attitude towards the private sector, which resulted in an orgy of greed for a decade, built on debt.
More horse****. Reagan had a far larger pie to play with and no economic depression thanks to his predecessor. Tax rates when Reagan took over were much much much higher than they were when Obama took over, hence any effect would be much greater. On top of that Reagan created the deficit spending idea and much of the debt that Obama has to contend with today.
Like it or not, Obama was handed a rotten egg in a barrel full of half rotten apples, plus had to contend with 30 years of Reaganomics and his failed vision of trickle down economics. Romeny wants to continue the trickle down economics bull**** and the failed policies that have now shown not to work. Now saying that, I am not totally convinced that Obama's policies are the right ones, but I do know the few ideas Romeny has floated are the same crap we have heard from the GOP since Reagan and the same crap that has lead the whole planet into this hole it is in today.
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