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In talks of equality vs equity, and what's "fair" vs. what's not: There's an element here I like to call the Ferrari Factory Paradox.
It has been brought up several times, in several different ways, over time. But to the same end: "If your own employees can't afford to buy the very product that you're manufacturing ... "
1. At an ice cream shop, it's easy. Heck, as a perk, they probably get all they want to eat on shift, and only pay for what they take home.
- As prices rise, though, the picture changes -
2. At a cell phone store, your sales reps may be paid, in part, by commission. At some point in their employment I imagine they will buy, with their own money, a phone. Sure, the plan will likely be subsidized but that's not what we're talking about. Phones (nowadays) are rarely, if ever, subsidized for cellular store employees. I would expect them to be able to afford *a* phone, maybe not buy each and every phone the moment it comes out (!!!) but I'd expect them to be able to afford a new iPhone every 2 years. Lump sum or payments being neither/nor because no interest is charged for spreading it out over payments.
- Prices rise further, less % of your employees will be expected to be able to afford the product -
3. You sell Rolls-Royce, build Ferraris, remodel and update luxury yacht interiors. At this level, less and less employees in the company will be able to buy what they touch each and every day. Also bear in mind the FREQUENCY with which these items are typically bought, even by customers who can afford them.
My point is there's more at play here than just A-and-B examples. We know that at the extreme upper end of big ticket item market, the very real potential of single-digit sales numbers being made or broken by a single sale are the nature of the beast.
This is why (just one example) of how places like exotic car dealerships are supported by a more accessible product - preowned sales - preowned sales of MORE than just exotic cars. You might find a Subaru, a Ford Superduty, or a Tahoe at a Rolls-Royce dealership.
The luxury yacht company may have a service garage for boats - ANY boats - to fill in the gaps between their huge undertakings, the likes of which they may only see once or twice per year. Otherwise, a fluctuation of one (1!) customer would present either a 50% decrease or 50% increase in business that year.
You are really over thinking this. It's a simple question. If my boss makes more money, is my bonus likely to be bigger... or smaller? Of course it could be taxes or sales or staffing or 100 other things but... At the end of the year (assuming I still work there)... If my boss made more will my bonus be bigger or smaller? This is the essence of trickle down at the local level.
Bonus is not needed for employees to benefit from tax cut. If taxes go down, the boss is making more money, they will want to expand and make more until marginal cost of new employee does not add more profit. The boss is going to pay the new hire more to get them to work for him and all employees benefit with higher income with more competition for employees. The aggregate for workers is more people hired and more making higher wages because of competition for labor. Supply / demand curve economics.
Donald Trump and his kids were all born with silver spoons and inherited their wealth in a very European class way. As wealth inequality increases, along with the cuts in the inheritance tax, you're going to see the U.S. become more like Europe where upward class mobility is more difficult. On the bottom end we're seeing large numbers of young people saddled with large student loans who are paid low wages and can't afford to build wealth, either through investing or buying a home, because they can barely afford to rent an apartment.
This is not about Trump and his kids but there is nothing wrong with inheriting wealth. The inheritance tax changes do not significantly impact his kids inheritances. There is nothing wrong with wealth inequality either - bringing down the 1% will hurt lower income earners also as fewer jobs are created.
On the bottom, we are seeing large numbers of young people that care more about living for today than paying off debt and investing for the future. Those with large loans and low wages are those that spent to much for a degree that is not desired by employers - those with a degree in demand are not having issues with low wages.
This is not about Trump and his kids but there is nothing wrong with inheriting wealth. The inheritance tax changes do not significantly impact his kids inheritances. There is nothing wrong with wealth inequality either - bringing down the 1% will hurt lower income earners also as fewer jobs are created.
Rich people don't create jobs with tax savings. That's what the quoted study, and many other studies, have shown. The No. 1 creator of jobs is demand for goods and services. If you give $1,000 to a low income person, it gets spent, demand goes up, businesses hire up to meet that demand. If you give $1,000 to a wealthy person, more often than not it goes into a money market, a municipal bond, maybe stocks -- none of which create jobs.
Quote:
Originally Posted by ddeemo
On the bottom, we are seeing large numbers of young people that care more about living for today than paying off debt and investing for the future. Those with large loans and low wages are those that spent to much for a degree that is not desired by employers - those with a degree in demand are not having issues with low wages.
I think you might be a little out of touch with what's really going on with the under-35 crowd? They have a much tougher time buying homes than previous generations, and it's not because they are carefree with money.
By your logic, I guess the tax increases of the early 1990's spurred the even greater economic boom of the 1990's. Not to mention that other taxes were increased under Reagan several times after 1981.
The internet boom of the '90s was a major reason for the good '90s economy.
JFK dropped the top tax rate from 91 percent to 65 percent. Okay, let's raise our top rate back to 65% since you consider that to be "supply side." But of course you'll object. In Supply Side World, tax rates are a one way street, always to be cut downward.
fine with me, if you want to go back, let's go back to include the same allowable tax deductions along with the tax rate of 65% .
The internet boom of the '90s was a major reason for the good '90s economy.
That was the larger point I was making. Demographic and technological changes in general have a much greater influence over the economy than changes in tax policy.
Yet certain ideologues cling to the mantra of supply side economics despite evidence to the contrary.
Over the eight years of the Reagan Administration:
20 million new jobs were created
Inflation dropped from 13.5% in 1980 to 4.1% by 1988
Unemployment fell from 7.6% to 5.5%
Net worth of families earning between $20,000 and $50,000 annually grew by 27%
Real gross national product rose 26%
The prime interest rate was slashed by more than half, from 21.5% in 1981 to 10% in 1988
Given actual rates of inflation, through 1987, the Reagan tax cuts saved the median-income two-earner American family of four close to $9,000 in taxes from what it would have owed in 1980.
But no - "Trickle down" tax cuts don't work.
President Reagan's tax cuts really were not about trickle down. They worked, because it made the tax system "more efficient". It got rid of many, many deductions and scams.
Remember it also made capital gains, dividends, and interest taxed at the same rate. The trickle down started when Congress and both Democrats and Republicans started cutting capital gains and dividend rates which is where most rich people make their money.
I did see a research paper a few years back that the Bush Tax Cuts triggered the greatest economic boom in world history. Unfortunately, the boom happened in China as the tax cut money moved there and investments there created the economic boom that China experienced. See Apple, and a host of other American corporations for more detail.
The very rich are globalists. They do not care about this country, but the "world".
I think tax cut policy is meaningless these days. TAX REFORM is more important.
My sense is that the Trump economic boom had more to do with regulatory reform.
That freed up all business activity to focus on productive activities rather than regulatory processes. For small business this is critical, they do not have the economics of scale that the corporations do....and therefore, regulations drive small business out and it is replaced by large corporations. We really do need to focus on reforms so the average small business spends at most say 10% of its time and money on regulations.
Instead of tax cuts the Federal government should focus on breaking up the large corporations. They are inefficient in innovation and development. MicroSoft was awful, their predatory practices bought out the competition and stifled innovation. Innovation in the computer industry these days is TIK-TOK. REALLY???? Break them all up. Keep them from buying out their competition.
Immigration. Real wages for working people increased under President Trump. Some was simply due to regulatory reform, but more importantly limits on immigration.
Immigration accounts for about half the so-called economic growth in this country. But that is "captured" by the rich, making them richer. The working folks and new immigrants end with little of the benefits from immigration. The rich feel that productivity gains are THEIRS since they own the business. So worker wages do not rise at all, during periods of high immigration. It is simply supply and demand.
Arguments about tax cut policy are really a diversion from the real economic reforms that are needed in this country.
The worst effect of the 2020 election is that we will be moving back to Bush 1, Clinton, Bush 2, and Obama economic policies that benefited the rich in this country and impoverished the working class. AND the tax cuts have little to do with it.
That was the larger point I was making. Demographic and technological changes in general have a much greater influence over the economy than changes in tax policy.
Yet certain ideologues cling to the mantra of supply side economics despite evidence to the contrary.
And proponents of high taxes cling to the mantra of tax, redistribute and spend despite endless evidence of its sub-optimality.
If taxes don't matter why are so many people and a fair number of businesses fleeing high tax areas/cities? Why have so many black Americans left - left leaning cities over the last ten or so years? A buddy who is black and and ex of Portland jokes that when he and his family left they halved the black population of the city.
San Francisco/TBA have Apple/Google/Cal and Stanford and that's great but it also has school teachers living in dorms, large numbers of visiting nurses and $105,000 income is considered "pressured" because local cost structure is unhealthy and that's in great part due to taxes.
This is a good example of baffling with B.S. This is a working paper that is part of international inequalities institute study done by the London school of economics AND political science. This paper is using the data from 18 countries and 30 odd tax cuts over 50 years - with unemployement, economic activity, gdp,etc that would be a lot of data - where is it? The charts hide what is actually being analyzed.
This is really just a series of charts that is more concerned with income inequality than actual tax cut analysis. There is more in the bibliography than actual data analysis shown. Also their conclusion shows a heavy bias - Tax cuts are about economic growth, tax cuts are not about resolving income inequality. There is nothing in the paper that suggests that any of this applies to any specific country.
Not even close to a definitive study of the issue.
No, you do not even need a study for this, it makes logical sense.
Even the wealthy and those on the right have said over and over many times, the reason the poor are poor is because they blow all their money and do not save or invest it.
The rich are essentially agreeing that trickle up economics works.
Bada Bing
Bada Bang
Bada Boom
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