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Such an expansive basic economic understanding---unfortunately it isn't respecting the reality.. The upper class, through "their political representation," usually makes certain that tax burdens fall to those in the great middle, yes, they technically would fall on higher "rates" of taxation, but, pay less due to more liberal deductions and deferred status than the lower classes. And, for the record, in the upper stretches of American wealth---the money isn't trickling down, as much as it is expanding in investments..A lot of that investment money is aiding in the development of other economies rather than our own. it's trickling all right, but not to you and me.
*-Property taxes are passed on to the consumer, then written down!!
*-property maintenance is usually done by the lowest laboring classes, (see below)
*-Have you been by a construction build out lately? Mostly guys who would be running like hell should ICE ever show up!!
1. Please explain how to "write down."
2. Yes, the taxes is passed onto the consumers. So what's the point?
3. What's your point? The construction workers don't get paid?
It's only a "con game" to people who are socialists or don't understand economics.
When someone creates something that there is a demand for, or they create something that is so unique that it creates a demand, and they invest money to build/market that product, a business is created. That business hires people for all the various positions that must be filled. That puts money in peoples pockets (they receive a salary or wage for their work). That is "trickle down" at work, in the simplest terms.
People investing money in businesses create jobs and prosperity for others. When the government removes stumbling blocks from the job creators, "trickle down" has a chance to work. When government burdens business, that "trickle down" effect is minimized.
The Markets are booming. Under your theory jobs and job creation should be also. It is not.
Yes - the premise is based that the rich will spend and/or invest more - which will keep more people employed receiving wages... so that the employed people will have money to go to the movies.
The billionaire may not buy 1000 tickets directly... but through employing 1000 people in his company - he indirectly is the source for 1000 people buying movie tickets.
You've obviously never heard of the multiplier effect derived from the marginal propensity to consume. In fact, the statement you made has been empirically denied time and time again. Trickle down doesn't work because consumers drive demand. Yes, a movie executive may employ 1000 people - but we are arguing that the trend of bonuses and lower taxes for executives is voodoo economics.
Take this study from the Institute for Policy Studies:
All those dollars low-wage workers spend create an economic ripple effect. Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP.
These pennies add up considerably on $26.7 billion in earnings. If the $26.7 billion Wall Streeters pulled in on bonuses in 2013 had gone to minimum wage workers instead, our GDP would have grown by about $32.3 billion, over triple the $10.4 billion boost expected from the Wall Street bonuses.
How many Rolls Royce do the poor buy? How many mansions do the poor buy? That doesn't create jobs and get money into the economy?
Certainly. But not at the same rate.
Quote:
So I guess the rich spending their money on one item is the important thing and not the total amount they spend.
As luck would have it, we run the numbers on such things.
First, we're off the "investing" and back to simple consumption spending, right? Cool.
Have you heard of the multiplier effect? It's the idea that when an actor in the economic system gets a sum of money, he'll spend a certain fraction of that, the recipient will spend a fraction that, so on and so forth. It means that we can insert $1 into the system (say, a tax cut) and, if each actor in the chain is inclined to spend, get way more than $1 of economic activity out of it. In fact, more inclined to spend they are, the more economic benefit.
Turns out the poor are way more inclined to spend than the rich. This makes sense. They're poor, because all of their money returns to circulation very quickly - that is, in fact, a working definition of "poor". The likelihood that a poor guy will spend the heck out of $50 is extremely high, the likelihood that a rich guy will is much lower. This is what Drewjdeg brought up - marginal propensity to consume. And that is provably higher for low-income people than for high-income ones. (It's damn expensive to be poor.)
If you're formulating economic policy to encourage money changing hands - and that is what an economy is - trickle-down is, indeed, voodoo. Or as I put upthread - horses and sparrows.
It's only a "con game" to people who are socialists or don't understand economics.
When someone creates something that there is a demand for, or they create something that is so unique that it creates a demand, and they invest money to build/market that product, a business is created. That business hires people for all the various positions that must be filled. That puts money in peoples pockets (they receive a salary or wage for their work). That is "trickle down" at work, in the simplest terms.
People investing money in businesses create jobs and prosperity for others. When the government removes stumbling blocks from the job creators, "trickle down" has a chance to work. When government burdens business, that "trickle down" effect is minimized.
Someone need to invest. That someone is some rich fat cats that the liberals hate.
Regardless how great the idea is or how big the demand is, if nobody invest, nothing happens. In my old communist country where we have income equality, nothing happens, but everybody wants everything from toothpaste to TV. Great great great demand, but nobody has money to invest - so nobody has anything but what the government provides, which is near nothing. Look at North Korea, that's what an income equality would do. No, it's not because of dictatorship. China has dictatorship, but their economy is booming.
Without investment, Apple, Google, HP, etc. etc. etc. would all be a few farts in the desert.
Someone need to invest. That someone is some rich fat cats that the liberals hate.
Regardless how great the idea is or how big the demand is, if nobody invest, nothing happens. In my old communist country where we have income equality, nothing happens, but everybody wants everything from toothpaste to TV. Great great great demand, but nobody has money to invest.
Without investment, Apple, Google, HP, etc. etc. etc. would be a fart in the desert.
The money is just sitting as it has been for years.
The money is just sitting as it has been for years.
The money can't be just sitting there. The banks need to pay interest, however low it may be.
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