Curious1

I am curious about tax policy i want to do a survey with several threads.

Tax break for the rich, trickle down economics.

How does it work? Exactly how does it trickle down? Basically how does it help the economy and jobs?

Failed attempt I wanted to know HOW? Exactly. Step by step how it gets there.

a reply to: roth1


In theory, it's supposed to encourage the wealthy to invest into their own businesses in an "employer" capacity and become "job creators". The problem is that this applies to all the wealthy and is blind to the large percentage of rich people who simply invest overseas or just hoard their wealth. So, it sort of trickles down and it sort of works.

How it kills us is that it ensure that more money is being removed from our economy thus requiring "quantitative easing" and other insane band-aids we come up with. A more sensible solution would be the opposite. No income tax under a certain income and higher tax on higher income. People who don't make much can't afford to invest overseas and therefore pump it all directly back into the economy, improving business and GDP. A tax-free lower class would be more of a "job creator" than the "trickle-down" model.

It's never worked for any extended period of time which is one of many reasons the term "trickle-down" is normally met with a few chuckles and head shaking.

a reply to: roth1

Sorry, had to alert Mods about your 4 threads on this topic... Hopefully you can quickly get what you wanted from the other 3 threads quickly and put them in this one.

I must say though, this kind of sounds like a homework assignment!? Is it?

Why are you curious? What is your point in surveying us? For what it's worth, tax breaks for the rich are/were supposed to stimulate expansion and jobs. But realistically it now just lines fatcats pockets and they 'streamline' their business model, which is wanker speak meaning they sent the jobs offshore.

originally posted by: roth1
I am curious about tax policy i want to do a survey with several threads.

Tax break for the rich, trickle down economics.

How does it work? Exactly how does it trickle down? Basically how does it help the economy and jobs?

The short answer to your question is; "It Doesn't Work!"

It doesn't help the economy and it doesn't create jobs, at least not on the magnitude portrayed by those who would try to convince the american public that it's the "fix-all" answer to job creation.

If anything, it should be called "Trickle On" instead of "Trickle Down."

originally posted by: Flatfish

originally posted by: roth1
I am curious about tax policy i want to do a survey with several threads.

Tax break for the rich, trickle down economics.

How does it work? Exactly how does it trickle down? Basically how does it help the economy and jobs?

The short answer to your question is; "It Doesn't Work!"

It doesn't help the economy and it doesn't create jobs, at least not on the magnitude portrayed by those who would try to convince the american public that it's the "fix-all" answer to job creation.

If anything, it should be called "Trickle On" instead of "Trickle Down."

Then how would explain the unemployment rate being under 5% for 2006 and 2007?

Must be something else.

won't hire 2 to do 1's job.

Invest in own business that does not say how it created a job or helped the economy.a reply to: Cuervo

I wanted to hear a valid answer if some one had one. A real description step by step how it worked. I should edit and be more descriptive. a reply to: Qumulys

originally posted by: xuenchen

originally posted by: Flatfish

originally posted by: roth1
I am curious about tax policy i want to do a survey with several threads.

Tax break for the rich, trickle down economics.

How does it work? Exactly how does it trickle down? Basically how does it help the economy and jobs?

The short answer to your question is; "It Doesn't Work!"

It doesn't help the economy and it doesn't create jobs, at least not on the magnitude portrayed by those who would try to convince the american public that it's the "fix-all" answer to job creation.

If anything, it should be called "Trickle On" instead of "Trickle Down."

Then how would explain the unemployment rate being under 5% for 2006 and 2007?

Must be something else.

Just off the top of my head, I'd venture to say that it was mostly driven by the fraudulent banking practices that eventually led to the 2008 financial meltdown and ensuing recession. Especially, seeing how 4 of the top 10 job cutting employers at the time happen to be in the finance industry.

Not to mention, the "Trickle Down" affects the meltdown had on the construction industry that was dependent on continued home sales in order to sustain it's workforce.

originally posted by: roth1
I wanted to hear a valid answer if some one had one. A real description step by step how it worked. I should edit and be more descriptive. a reply to: Qumulys

If you want a real answer, you should ask a real question.

Everyone with half a brain knows that "trickle down" economics is pure B.S.. Hell, even George Bush 41 recognized it for what it really was and called it "Voodoo Economics."

Like I said before, the answer to your question is; "It Doesn't Work!"

The answer is that in isolation it won't work. You have to have an environment all around that is conducive to creating and growing your business. The theory is that those who are into creating businesses and growing them do so because that's how they create more wealth for themselves. So, in theory, a tax cut gives them more wealth to use to grow their personal wealth with and by the time the wealthy get that wealthy, they continue to grow their own money through investment.

The problem occurs when the rest of the business environment only encourages job growth, creation and expansion overseas ... then the money does wind up going elsewhere. If it is cheaper, easier and more cost effective for a business to do business in China than in the US ... where do you think they are going to go to do business?

So, in order for the tax cut to work, you have to enact other policies to help it along. Right now, the entire governance structure in the US is more or less business hostile, so just cutting taxes isn't going to do much, but raising them isn't definitely not going to help, either.

Another facet of this argument that often gets overlooked, too, is that many times the small business owner gets classified in the same tax bracket strata as the mega business. Your small business owner can't afford to go overseas, but when you choke off his ability to have and keep his earnings, you also choke off his ability to grow his small business or even start one up in the first place. This also has a profound, negative impact on the overall economy.

Right now in our household, my husband works for the prior type of business - the mega business, and I work for the second type - the small business owned and grown by two local entrepreneurs. In this environment in the US, neither one is expanding or growing, due to a variety of anti-business policies currently in force of which tax rates are just one facet.

a reply to: ketsuko

If I'm not mistaken, I think the threshold for being classified as a "Small Business" by the IRS is any business that employs 500 or less employees. IMO, that benchmark is far too broad. Personally, I think that number should be somewhere around 50 employees.

Companies that employ 500 people are NOT small, at least not in the sense that most prudent people consider the term and those businesses shouldn't be afforded the same breaks that truly small businesses deserve. I'd bet good money that at some time in the past, there was a substantial effort lobbied in the halls of Congress to get the designation worded just that way so that they could enjoy the protections offered under the "Small Business" umbrella.

With respect to businesses running overseas because taxes are lower, well I think it's a little more complicated than that. Businesses big enough to do so run overseas for a whole host of reasons, most of which have more to do with their willingness to exploit the lack of labor and environmental protections in developing nations than tax rates, although I'll admit that tax rates do indeed play a role but maybe not in the way you think.

These so called "Free Trade Agreements" like NAFTA and even worse, awarding China with Permanent Most Favored Trading Status, (both of which enacted by Bill Clinton) have really done nothing more than open the "tax free" gates for business looking to go multi-national and the american standard of living has suffered because of it.

These so called "Free Trade" agreements are anything but "Fair" agreements and so long as they are in effect in their current form, we should tax the products being imported by those companies heavily to offset the damage being done to our economy here at home.