Author Topic: Trickle down economics  (Read 7724 times)

scottish

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Trickle down economics
« on: June 13, 2017, 05:16:45 PM »
Trickle down economics is the hypothesis that by cutting taxes on the rich, they will do things that benefit the economy and society as a whole.

Effused by Democrats (trumped up trickle down economics, I believe she said...), the state of Kansas has just completed a 5 year experiment to determine if trickle-down economics works.    According to the Washington Post, the experiment did go as well as it could have.      The SCOTUS itself ruled that the funding cuts to education were unconstitutional.   The legislature has had enough and they have decided to *reverse* the tax cuts.    Republicans reversing tax cuts?

Linky
https://www.washingtonpost.com/opinions/trickle-down-economics-is-a-nightmare-kansas-proved-it/2017/06/12/c2d7aae0-4fa6-11e7-91eb-9611861a988f_story.html?utm_term=.1f1b623e4e36

sol

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Re: Trickle down economics
« Reply #1 on: June 13, 2017, 05:26:03 PM »
The whole country tried an experiment to find out if trickle down economics worked.  It was called the Reagan-Bush years.

The whole notion was only ever supposed to be a facetious cover story for cutting taxes on the rich.  I'm still shocked anytime someone appears to be taking the idea seriously. 

AlanStache

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Re: Trickle down economics
« Reply #2 on: June 13, 2017, 05:41:07 PM »
During a discussion, an uncle of mine on FB said "some economists support it."  Interested in learning and seeing other opinions I turned to google but could not find any evidence for it on the first two pages.  I politely told him as much and asked for a source, I did not get one, and he did not concede the point.

I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times.  That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.

In SimCity cutting taxes can spur some growth but it really does not results in more tax income.  The best way to get tax revenue in the game is to either invest in education or get tons of pollution.  So there you go :-)

But really if there is good data to support Trickle Down please post a link, I would genuinely like to read it. 
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tarheeldan

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Re: Trickle down economics
« Reply #3 on: June 13, 2017, 05:47:49 PM »
Yeah, started with Reagan here and Thatcher in the UK. Total nonsense. The marginal propensity to consume and/or invest for those dollars for the rich is less than the mpc for for those with low disposable income.

dividendman

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Re: Trickle down economics
« Reply #4 on: June 13, 2017, 06:19:44 PM »
What will boost the economy is giving everyone $20k that phases out as you earn more.

Then you can also eliminate a bunch of social programs and get rid of the "people scamming the system" arguments. You can also get rid of the "government doesn't know how to spend money" since people will get it and spend it.

The poorest will spend all of it, the rich won't get any, but that's ok, they wouldn't spend it anyway.

UBI baby, it has to come.

sol

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Re: Trickle down economics
« Reply #5 on: June 13, 2017, 07:18:00 PM »
The poorest will spend all of it, the rich won't get any, but that's ok, they wouldn't spend it anyway.

When you say it that way, the obvious solution for rich people is to figure out how to sell whatever all the poor people will be buying.

For example, if everyone is going to get $20k, how many new cars will hit the market at $19,999?

scottish

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Re: Trickle down economics
« Reply #6 on: June 13, 2017, 07:25:44 PM »
Car payments.    It's not the sticker price on the car, it's the monthly car payment that will be tuned to the basic income.

Wow, it boggles the mind.   How many ways could you pack recurring fees into $1666.67/month?   Cell phones, cars, tablets, watches, media subscriptions.

dividendman

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Re: Trickle down economics
« Reply #7 on: June 13, 2017, 07:36:15 PM »
The poorest will spend all of it, the rich won't get any, but that's ok, they wouldn't spend it anyway.

When you say it that way, the obvious solution for rich people is to figure out how to sell whatever all the poor people will be buying.

For example, if everyone is going to get $20k, how many new cars will hit the market at $19,999?

Yeah, most of them will blow all of their UBI, but that's why you have higher taxes on the rich to keep the flywheel going. Productivity gains will eventually make this necessary.

A Definite Beta Guy

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Re: Trickle down economics
« Reply #8 on: June 14, 2017, 11:07:31 AM »
During a discussion, an uncle of mine on FB said "some economists support it."  Interested in learning and seeing other opinions I turned to google but could not find any evidence for it on the first two pages.  I politely told him as much and asked for a source, I did not get one, and he did not concede the point.

I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times.  That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.

In SimCity cutting taxes can spur some growth but it really does not results in more tax income.  The best way to get tax revenue in the game is to either invest in education or get tons of pollution.  So there you go :-)

But really if there is good data to support Trickle Down please post a link, I would genuinely like to read it.

"Support" kind of implies a value judgment independent on positive effects. But, you're not going to find anyone supporting "trickle-down" economics, because "trickle-down" specifically is a rhetorical attack by left-of-center, specifically in the last few years.

Proponents will typically call their policies "supply-side." There are a couple pieces in here, but the three big ones (and they are distinct):
1. High government debt/deficit crowds out private investment.
2. High taxes discourage work/savings/investment.
3. Government spending inefficiently targets well-being.

These are all different. A lot different. You can totally think that taxes don't do a thing to discourage work, but that the government is still incompetent so taxes are essentially wasted. You also can think high deficits crowd out spending and be opposed to deficits and debt, but not be opposed to government spending per se. You can also think deficits don't matter, that government does a good job of spending money, but taxes are a big burden to growth.

Basically all three are different, you can pick and choose. Strong orthodox supply-siders believe all three.

#2 seems to be the most hotly contested, so here's a quick article that might provide some background:
http://voxeu.org/article/income-tax-and-labour-supply-let-s-acknowledge-what-we-don-t-know
Quote
Reading the recent empirical literature, I have been struck to find that while authors may differ on the magnitude of labour-supply elasticities, they largely agree on the sign. The consensus is that increasing tax rates usually reduces work effort.
Since labor is incorrectly spelled with a "u," you can probably guess this isn't some right-wing American source saying it.
This guy goes on to use some labor-leisure preferences to sorta say it's still undetermined, but my reading is that he's an outlier: consensus is tax increases discourage work. It's not at all clear how much, or among which groups. For example, women tend to increase their work hours more when taxes are cut/wages are higher. There's a lot of substitution effect there.

Even Sweden used a dynamic scoring (IE, tax cuts boost economic growth) when they did their tax reforms 20+ years ago.

The specific claim "tax cuts pay for themselves" is total bollocks. I don't know ANY serious economist who actually believes that. The Kansas situation doesn't really surprise anyone.

If you want to see the supply-side thought on Kansas, look here: https://www.forbes.com/sites/rexsinquefield/2016/07/18/kansas-an-unsung-hero-for-economic-growth/#2a0d003d58f4
Quote
Significantly, every year since the tax cuts were implemented, Kansas has surpassed the state record for new business formations. When we consider that startups have decreased nationwide since the Great Recession of 2008, this achievement is particularly remarkable. What’s more, the Kansas unemployment rate stands at 3.7% – the lowest the state has seen since 2001, and well below the national average of 5.5%.

I think economists generally think capital is more sensitive to taxes than labor but I'm less confident on that.

Also, keep in mind that even if you think tax cuts might raise GDP to some extent, that doesn't mean you'll think tax cuts/spending cuts are a good idea. If we cut taxes by $700 billion initially, raised GDP by $1 trillion, and got $200 billion back, we'd still have to cut Medicare by 5/7. Most people would think that's a bad trade-off.

I'm personally skeptical of broad-based labor tax cuts and think taxes should probably increase, given the pressure on public finances. But I'm also highly skeptical that any of the proposed social programs that are left-versions of voodoo economics (free college, single payer) will perform any better.

BlueHouse

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Re: Trickle down economics
« Reply #9 on: June 14, 2017, 12:49:15 PM »

I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times.  That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.


I think the reason the theory still exists is because poor people look at rich people and think "they must be doing something right, so if they say this is the best way, then I believe them because I want to be rich".  Way back when someone said "if you're not a democrat at age 20, you have no heart;  If you're not a republican at age 35, you have no brain."  I personally believe that this was the most effective campaign in recruiting people who do not think for themselves in the past 50 years of politics.  Young people age believing at some point when they get serious about their finances, that they should start re-thinking their economic beliefs. 

Just my opinion.
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scottish

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Re: Trickle down economics
« Reply #10 on: June 14, 2017, 03:53:45 PM »
During a discussion, an uncle of mine on FB said "some economists support it."  Interested in learning and seeing other opinions I turned to google but could not find any evidence for it on the first two pages.  I politely told him as much and asked for a source, I did not get one, and he did not concede the point.

I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times.  That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.

In SimCity cutting taxes can spur some growth but it really does not results in more tax income.  The best way to get tax revenue in the game is to either invest in education or get tons of pollution.  So there you go :-)

But really if there is good data to support Trickle Down please post a link, I would genuinely like to read it.

"Support" kind of implies a value judgment independent on positive effects. But, you're not going to find anyone supporting "trickle-down" economics, because "trickle-down" specifically is a rhetorical attack by left-of-center, specifically in the last few years.

Proponents will typically call their policies "supply-side." There are a couple pieces in here, but the three big ones (and they are distinct):
1. High government debt/deficit crowds out private investment.
2. High taxes discourage work/savings/investment.
3. Government spending inefficiently targets well-being.

These are all different. A lot different. You can totally think that taxes don't do a thing to discourage work, but that the government is still incompetent so taxes are essentially wasted. You also can think high deficits crowd out spending and be opposed to deficits and debt, but not be opposed to government spending per se. You can also think deficits don't matter, that government does a good job of spending money, but taxes are a big burden to growth.

Basically all three are different, you can pick and choose. Strong orthodox supply-siders believe all three.

#2 seems to be the most hotly contested, so here's a quick article that might provide some background:
http://voxeu.org/article/income-tax-and-labour-supply-let-s-acknowledge-what-we-don-t-know
Quote
Reading the recent empirical literature, I have been struck to find that while authors may differ on the magnitude of labour-supply elasticities, they largely agree on the sign. The consensus is that increasing tax rates usually reduces work effort.
Since labor is incorrectly spelled with a "u," you can probably guess this isn't some right-wing American source saying it.
This guy goes on to use some labor-leisure preferences to sorta say it's still undetermined, but my reading is that he's an outlier: consensus is tax increases discourage work. It's not at all clear how much, or among which groups. For example, women tend to increase their work hours more when taxes are cut/wages are higher. There's a lot of substitution effect there.

Even Sweden used a dynamic scoring (IE, tax cuts boost economic growth) when they did their tax reforms 20+ years ago.

The specific claim "tax cuts pay for themselves" is total bollocks. I don't know ANY serious economist who actually believes that. The Kansas situation doesn't really surprise anyone.

If you want to see the supply-side thought on Kansas, look here: https://www.forbes.com/sites/rexsinquefield/2016/07/18/kansas-an-unsung-hero-for-economic-growth/#2a0d003d58f4
Quote
Significantly, every year since the tax cuts were implemented, Kansas has surpassed the state record for new business formations. When we consider that startups have decreased nationwide since the Great Recession of 2008, this achievement is particularly remarkable. What’s more, the Kansas unemployment rate stands at 3.7% – the lowest the state has seen since 2001, and well below the national average of 5.5%.

I think economists generally think capital is more sensitive to taxes than labor but I'm less confident on that.

Also, keep in mind that even if you think tax cuts might raise GDP to some extent, that doesn't mean you'll think tax cuts/spending cuts are a good idea. If we cut taxes by $700 billion initially, raised GDP by $1 trillion, and got $200 billion back, we'd still have to cut Medicare by 5/7. Most people would think that's a bad trade-off.

I'm personally skeptical of broad-based labor tax cuts and think taxes should probably increase, given the pressure on public finances. But I'm also highly skeptical that any of the proposed social programs that are left-versions of voodoo economics (free college, single payer) will perform any better.

That sounds like a lot of sensible economics combined with a couple of American myths.

The big one is about single payer health care.   It seems to be pretty generally accepted that single payer health care works better than the US system in western Europe and Canada.    For definitions of better I suppose.   Up here the wealthy can always go to the states if the single payer system doesn't meet their needs.   For the other 99%, single payer works out better.

But I have to ask, are you American or English?   Labor is the American spelling, but bollocks is usually an English expression.

RangerOne

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Re: Trickle down economics
« Reply #11 on: June 14, 2017, 04:51:29 PM »
Here is a fiscal conservatives economists view of it.

"The phrase “trickle down” often comes up in discussions of tax policies. Historically, tax revenues have in a number of instances gone up when tax rates have been reduced. But any proposal by economists or others to cut tax rates, including reducing the tax rates on higher incomes or on capital gains, can lead to accusations that those making such proposals must believe that benefits should be given to the wealthy in general or to business in particular, in order that these benefits will eventually “trickle down” to the masses of ordinary people. But no recognized economist of any school of thought has ever had any such theory or made any such proposal. It is a straw man. It cannot be found in even the most voluminous and learned histories of economic theories.
What is sought by those who advocate lower rates of taxation or other reductions of government’s role in the economy is not the transfer of existing wealth to higher income earners or businesses but the creation of additional wealth when businesses are less hampered by government controls or by increasing government appropriation of that additional wealth under steeply progressive taxation laws. Whatever the merits or demerits of this view, this is the argument that is made – and which is not confronted, but evaded, by talk of a non-existent “trickle-down” theory." -Thomas Sowell’s book “Basic Economics: A Common Sense Guide to the Economy“:


So basically "trickle-down" is just political rhetoric mis-characterizing actual economic goals to make a potentially complex balancing act seem simple and palatable to the public.

The question is growth being hampered by bad tax policy is an open question. Wealth is not however being simply transferred from the rich to the poor.

sol

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Re: Trickle down economics
« Reply #12 on: June 14, 2017, 06:10:30 PM »
Wealth is not however being simply transferred from the rich to the poor.

If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?


DoubleDown

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Re: Trickle down economics
« Reply #13 on: June 15, 2017, 07:10:08 AM »
Wealth is not however being simply transferred from the rich to the poor.

If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?

I read in the Washington Post the other day that, ironically, the restoration of the previous tax rates in Kansas (prior to the predictably disastrous tax reduction "experiment") will hit poor people there harder than the rich. Everyone's rates will go up, but the rates for the poor will go up significantly more than for the rich. It was somewhere along the lines of the poor paying 6% more, while the rich would pay about 2% more. At least, hopefully, those people will get some basic services restored, like a reasonable education (the tax cuts had destroyed the public schools system in Kansas along with other public services).

Even though trickle-down- or supply-side- or voodoo- or whatever-you-want-to-call-it-economics has proven to be a complete failure the previous 20 times it's been tried, I'm sure the 21st time the results will be different...
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Chris22

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Re: Trickle down economics
« Reply #14 on: June 15, 2017, 09:34:44 AM »
Wealth is not however being simply transferred from the rich to the poor.

If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?

I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them.  If you take $3 from my wallet instead of $5, you didn't transfer me $2.
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dividendman

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Re: Trickle down economics
« Reply #15 on: June 15, 2017, 10:11:51 AM »
Wealth is not however being simply transferred from the rich to the poor.

If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?

I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them.  If you take $3 from my wallet instead of $5, you didn't transfer me $2.

Agreed, cutting taxes on group X does is not the same as transferring wealth from all groups not X (unless, of course, those tax cuts are paid for by increasing taxes on the not X groups).

That being said, I still believe, and studies show, the most effective way of helping the poor IS to take money from the rich and give it directly to them in cash. Not through social programs and other mechanisms.

Here's an article that references many studies and trials on social program (food for the poor and others) vs straight up giving them cash:
https://www.theatlantic.com/international/archive/2015/09/welfare-reform-direct-cash-poor/407236/

PathtoFIRE

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Re: Trickle down economics
« Reply #16 on: June 15, 2017, 10:34:00 AM »
Wealth is not however being simply transferred from the rich to the poor.

If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?

I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them.  If you take $3 from my wallet instead of $5, you didn't transfer me $2.

I'm making a few assumptions based on your very short response, but why is it that the money you are able to receive/extract in our current social and economic system is somehow "fair" or "natural" or "proper"? Everything about our economic system is social in nature, down to money itself. These are data, notations, balancing an incredibly diverse group of people, processes, businesses, interests, values, etc. Money represents work and value, but it also represents so much more, and is influenced and created and destroyed and flows by the workings of so many different parts of our social system. Just because you get paid $X or make $X through a business, invention, or idea, doesn't mean the rest of society has absolutely no continued claim or power over it. Money belongs to all of us in some sense, it's not some deserted (or maybe not so deserted) island that you can stake a claim to and declare yourself sole principality over. And vice versa, most of us would be abhorrent of a system that ceded complete control over to "everyone else". It's called balance, and while society and economy are constant works-in-progress, I find the idea that money is completely sacrosanct as useless and detrimental as it's twin, which proclaims money arbitrary.

sol

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Re: Trickle down economics
« Reply #17 on: June 15, 2017, 10:34:34 AM »
Wealth is not however being simply transferred from the rich to the poor.

If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?

I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them.  If you take $3 from my wallet instead of $5, you didn't transfer me $2.

Taxes aren't taking, . They are the price of an all access pass to American services.

Instead of thinking about lightening your wallet, think of buying a movie ticket.  Everyone pays for one, but then the republicans give the theater owner  a 50% refund on his.  His ticket is suddenly cheaper, plus he's the one already getting rich from everyone else's ticket purchases. 

This is essentially the argument behind tax cuts for the wealthy.  They argue that by making the theater owner richer, he'll make the theater nicer for everyone and then people will want to but more tickets.  Which maybe works in situations where the theater is really shitty (and the owner is childless and benevolent), but a more effective way to increase the number of tickets sold is to give that money to the customers who buy the tickets, instead of to the theater owner who sells them.
« Last Edit: June 15, 2017, 10:48:56 AM by sol »

Chris22

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Re: Trickle down economics
« Reply #18 on: June 15, 2017, 01:52:25 PM »
Wealth is not however being simply transferred from the rich to the poor.

If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?

I have a fundamental and philosophical problem calling "not taking" money from someone "transferring it" to them.  If you take $3 from my wallet instead of $5, you didn't transfer me $2.

Taxes aren't taking, . They are the price of an all access pass to American services.

They are the price, however they are mandatory, and we only have so much say in what the fee is. 

Quote
Instead of thinking about lightening your wallet, think of buying a movie ticket.  Everyone pays for one

Ahh...no, they don't.  About 47% (famously according to Mitt) don't.  (They pay for SSI/FICA but that's more of a standalone program; they also pay sales tax, indirect property tax, etc, but these are not funding sources for the US Federal gov). 


Quote
but then the republicans give the theater owner  a 50% refund on his.  His ticket is suddenly cheaper, plus he's the one already getting rich from everyone else's ticket purchases.

Again, no; his ticket is generally more expensive and he is generally one of the few paying.  He may get a bigger discount, but he is still paying far more for his ticket. 

Quote
This is essentially the argument behind tax cuts for the wealthy.  They argue that by making the theater owner richer, he'll make the theater nicer for everyone and then people will want to but more tickets.  Which maybe works in situations where the theater is really shitty (and the owner is childless and benevolent), but a more effective way to increase the number of tickets sold is to give that money to the customers who buy the tickets, instead of to the theater owner who sells them.

The problem is, how do you give a discount on a free ticket?  At some point you are simply advocating taking from the rich and giving to the poor and working poor.  That may be advantageous for the poor, but is it advantageous for the country?
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Chris22

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Re: Trickle down economics
« Reply #19 on: June 15, 2017, 01:55:05 PM »
That being said, I still believe, and studies show, the most effective way of helping the poor IS to take money from the rich and give it directly to them in cash

I won't argue with that statement, however I will quibble with the bolded; is that the question we are looking to answer?  Is that what's best for the country and society or just for the poor?  It seems like a one-dimensional answer to a one-dimensional question that exists in a multi-dimensional system.
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PoutineLover

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Re: Trickle down economics
« Reply #20 on: June 15, 2017, 02:09:35 PM »
I think people who are opposed to high taxes on the rich should be in favour of at least a living wage for everyone, and aid for those who can't get a job. It's crazy that in a wealthy country like the states waitresses can be paid 2.13 an hour and have to make the rest up in tips, and that is completely legal. The system is not fair, not to the poor at least. At federal minimum wage in the US, working full time, you only gross 15,080 a year. In Canada, it's 22K. No matter how frugal you are, it's almost impossible to live and save on that wage for one person, let alone someone with dependents. This whole argument about rich people needing tax breaks because they give oh so much to society and uncle sam already pisses me off. From my perspective, someone making 180K a year literally gets a years salary of minimum wage every month and is way past worrying about meeting their basic needs, so what are they complaining about? They do not have to choose between heating and food, they are worrying about where to jet off on vacation next. The system needs to be fixed so that people working an honest job can earn a living. Then we can worry about the rich people.

dividendman

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Re: Trickle down economics
« Reply #21 on: June 15, 2017, 02:13:24 PM »
That being said, I still believe, and studies show, the most effective way of helping the poor IS to take money from the rich and give it directly to them in cash

I won't argue with that statement, however I will quibble with the bolded; is that the question we are looking to answer?  Is that what's best for the country and society or just for the poor?  It seems like a one-dimensional answer to a one-dimensional question that exists in a multi-dimensional system.

Meh, I think if we help the people that have the least society benefits overall.  Giving a billionaire another 100 million isn't going to help anyone. Giving 100 thousand poor people $1k for food and other necessities will help their lives a lot.

Also, if you read the article I linked, giving money to people who spend it all is good for rich folks too (since they are beneficiaries of people spending money) and the middle since they get jobs.

crazyworld

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Re: Trickle down economics
« Reply #22 on: June 15, 2017, 02:36:21 PM »
A thought to add to the taxes discussion upstream: why do some folks who want to cut taxes and pay down the deficit. still want to keep adding to the defense budget?  Because the rich have the most assets, both domestically and abroad, which they would like to protect.

Chris22

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Re: Trickle down economics
« Reply #23 on: June 15, 2017, 02:55:53 PM »
A thought to add to the taxes discussion upstream: why do some folks who want to cut taxes and pay down the deficit. still want to keep adding to the defense budget?  Because the rich have the most assets, both domestically and abroad, which they would like to protect.

Two reasons:

1.  Defense is one of the few specifically enumerated powers in the Constitution for the Federal government.

2.  It's one of the things that really is not well provided for in most instances by the private sector, and is not done hardly at all by the states (lots of other things are double dipped, state and Fed)
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Chris22

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Re: Trickle down economics
« Reply #24 on: June 15, 2017, 03:08:28 PM »
That being said, I still believe, and studies show, the most effective way of helping the poor IS to take money from the rich and give it directly to them in cash

I won't argue with that statement, however I will quibble with the bolded; is that the question we are looking to answer?  Is that what's best for the country and society or just for the poor?  It seems like a one-dimensional answer to a one-dimensional question that exists in a multi-dimensional system.

Meh, I think if we help the people that have the least society benefits overall.  Giving a billionaire another 100 million isn't going to help anyone. Giving 100 thousand poor people $1k for food and other necessities will help their lives a lot.

Also, if you read the article I linked, giving money to people who spend it all is good for rich folks too (since they are beneficiaries of people spending money) and the middle since they get jobs.

Except that most "tax the rich" strategies are not set at the billionaire level.  You want to soak Zuck and Buffet and Gates and the like, knock yourself out.  But too often "Tax the rich" strategies extend way too far down, to where Hillary and Bernie think us schlubs making $250k/yr need to be soaked too. 
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dividendman

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Re: Trickle down economics
« Reply #25 on: June 15, 2017, 03:31:24 PM »
A thought to add to the taxes discussion upstream: why do some folks who want to cut taxes and pay down the deficit. still want to keep adding to the defense budget?  Because the rich have the most assets, both domestically and abroad, which they would like to protect.

I don't think one can argue that the rich aren't, by far, the largest consumers of all types of government spending.

Take this example:

You are Joe Schmoe and work at a warehouse earning $15/hr ($31200/yr), and walk to work because you're too poor for a car, and rent your house because you're too poor for a house and don't own any stock or business because you're too poor to have saved anything and don't fly anywhere because you can't afford plane tickets - you consume virtually no government resources but pay:

$2653 in federal income tax
$550 in california income tax
$1934 in social security (which you are statistically less likely to collect than a rich person because you die earlier)
$452 in medicare (ditto)

Now, rich dividendman works for a tech company and makes $400k/yr.
He owns a car and thus takes advantage of the interstate highway system, uses the state DMV, and all the other government car services. He owns a house and pays $20k interest on his home loan a year, for which he gets a deduction. He flies multiple times a month visiting places and for work, so he is consuming all sorts of airport and DHS services and infrastructure. He works for a tech company that has all sorts of patents, so he's consuming the patent office resources. He travels abroad 4 times a year, and is consuming all the immigration and passport services. He has a $1M portfolio of all these other companies which are getting subsidies and they themselves are consuming government resources. He has his house and rentals in the hills for which the fire department and department of the interior battles wildfires for him - so he consumes those resources. His employer and the stocks he owns utilize the state department and other federal agencies to battle for better trade deals and business investments, etc. etc.
He pays:

$113300 in federal income tax
$36621 in california income tax
$7347 in social security
$7600 in medicare

(assuming he doesn't use any business loopholes, gets all of his income in straight salary AND doesn't deduct anything like mortgage interest)

Now.... is dividendman paying too much for his consumption of government resources? Maybe, but he's definitely using a lot of them.

Is Joe Schmoe paying too much for his consumption of government resources? Definitely - he's consuming none yet still paying!

Except that most "tax the rich" strategies are not set at the billionaire level.  You want to soak Zuck and Buffet and Gates and the like, knock yourself out.  But too often "Tax the rich" strategies extend way too far down, to where Hillary and Bernie think us schlubs making $250k/yr need to be soaked too. 

I agree with you, but if you read my post above I think you'll agree that Joe Schmoe is getting ripped off more than dividendman. But I also agree that dividendman is getting ripped off more than Buffet and the billionaires.

I think there should be many MORE tax brackets.

Keep the current tax brackets but instead of pretending that someone who earns $400k should be taxed at the same rate as someone earning $4M, we can keep being progressive about the taxes all the way up to 90% or so.



Chris22

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Re: Trickle down economics
« Reply #26 on: June 15, 2017, 03:37:33 PM »
we can keep being progressive about the taxes all the way up to 90% or so.

Philosophically I disagree there should ever be a bracket over 49.9% on earned income.  I don't think the government should ever be entitled to half (or more) of something someone earned.
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scottish

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Re: Trickle down economics
« Reply #27 on: June 15, 2017, 03:47:24 PM »
The top tax bracket in Ontario is currently 54%.     I don't mind paying my way.   However I do mind when I see the government piddling away my tax dollars on pointless things, while important things are being neglected.


Cpa Cat

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Re: Trickle down economics
« Reply #28 on: June 15, 2017, 03:51:09 PM »
Kansas did it wrong. It was a trainwreck. They exempted all self-employment income, ordinary income from S-Corps, partnership income, rental income, and farm income.

The theory was that small businesses are job creators. Uh... wut?

If small businesses are job creators, why are we exempting rental income?

If small businesses are job creators, why is there no gross receipts or net profits cap so that we don't exempt large businesses?

It made zero sense. They did too much, too fast and none of the politicians understood what they were voting for. Republicans in Kansas started talking like they were shocked and surprised by the effects of the tax cuts. They called it the "LLC Loophole" because of a common misconception about the plan - when in fact it was neither a Loophole nor did you have to be an LLC to qualify.

As a CPA, I just wanted to bang my head against the wall. Do they seriously not even read these bills before voting on them? The people responsible for Kansas' tax regime had no F-ing clue what Kansas' tax regime was. No one should be surprised they failed.

I favor low taxes. I think low taxes pressure politicians to be decent fiscal stewards. The less money politicians in Kansas are trusted with, the better.

sol

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Re: Trickle down economics
« Reply #29 on: June 15, 2017, 03:53:13 PM »
But too often "Tax the rich" strategies extend way too far down, to where Hillary and Bernie think us schlubs making $250k/yr need to be soaked too.

You think 250k is too far down?  That's almost 10x the median individual salary, and 15x the median for blacks and Hispanics.

I'm totally in favor of 50% effective tax rates on income of over one million per year, but I don't think 30% effective rates on a quarter million per year is unreasonable while we still have American children literally going hungry while you upgrade your yacht.

Think about what you're saying here.  American citizens go hungry, die of preventable diseases, and are denied access to education or adequate police protection, because there is no federal funding to help them, and you want multimillionaires with mansions and three BMWs to get tax breaks so they can afford vacation homes in France?  Do you see how totally fucked up that is? 

Rich people do not need even more money than America has already provided then.  Poor people do need food and medicine that you are denyng them by asking to cut taxes on the rich.  America was built on a shared goal of improving the lives of all Americans, and trickle down economics is just an excuse to undo all of the progress we have made toward that goal.  It's a vote for returning to the days of the aristocracy, and that is not what America is about.

Philosophically I disagree there should ever be a bracket over 49.9% on earned income.  I don't think the government should ever be entitled to half (or more) of something someone earned.

The very richest among us do not work harder than the poorest.  They are not more deserving.  Do you think trump is rich because he is a better human being than you are?

The very richest Americans earn those crazy incomes precisely because our taxes have been used to build and protect an economic system that makes their income possible.  Taxes pay for the police and army that defends their assets, the roads that transport their products, the education that trains their workers, the media that let's them advertise, and the financial regulations that allow their marketplace to exist and thrive.  Arguably, their income should never exceed by much the economic benefits the government had provided to them, and in the case of billionaires that usually means 90%+ tax rates are defensible.  Taxes are the only thing that has made them rich in the first place, and maybe they should repay the favor?

Chris22

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Re: Trickle down economics
« Reply #30 on: June 15, 2017, 04:05:12 PM »
Holy red herrings Sol!
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sol

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Re: Trickle down economics
« Reply #31 on: June 15, 2017, 04:18:53 PM »
Holy red herrings Sol!

Oh, please elaborate.  Was it my assertion that people making more than 10 times the median salary can comfortable pay higher taxes that upset you?

Maybe it was my attempt to highlight the gross inequality of wealth in America that our current economic system perpetuates and protects?

Or was it the observation that the success of American capitalism is entirely predicated on effective taxation that has you up in arms?

Please, tell me more! 

If also love to hear your take on the republican health care plan that offers the huge tax cut on the wealthy that you seek, and pays for it by taking health insurance away from tens of millions of poor, elderly, and disabled people.  Is that really the kind of policy you think will make America stronger?  Do you think it's good for those poor people to have their health insurance taken away, as if trickle down economics will somehow provide them better health insurance than they had before?

Chris22

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Re: Trickle down economics
« Reply #32 on: June 16, 2017, 07:07:34 AM »
Think about what you're saying here.  American citizens go hungry, die of preventable diseases, and are denied access to education or adequate police protection, because there is no federal funding to help them, and you want multimillionaires with mansions and three BMWs to get tax breaks so they can afford vacation homes in France?  Do you see how totally fucked up that is?

Red herrings be here. 

Quote
Rich people do not need even more money than America has already provided then.  Poor people do need food and medicine that you are denyng them by asking to cut taxes on the rich.
And here


Quote
The very richest among us do not work harder than the poorest.  They are not more deserving.  Do you think trump is rich because he is a better human being than you are?

Strawmen be here.


The idea that the only thing standing between poor people and medicine and food is a bunch of rich people hoarding tax money so they can buy BMWs and yachts is simply absurd.  Even if we doubled everyone's taxes I have no confidence the federal government could use that money effectively to accomplish anything.  I mean, exhibit A I saw yesterday.  Yeah, I don't trust these fucktards with more money.
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

sol

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Re: Trickle down economics
« Reply #33 on: June 16, 2017, 08:23:51 AM »
The idea that the only thing standing between poor people and medicine and food is a bunch of rich people hoarding tax money so they can buy BMWs and yachts is simply absurd.  Even if we doubled everyone's taxes I have no confidence the federal government could use that money effectively to accomplish anything.

So your complaint is that the federal government doesn't spend it's tax revenues wisely, and you think that's the reason we have poverty in America?

Let's review.  You're literally asking the federal government to give more money to rich people than they currently get, because you think the federal government isn't doing enough to address American poverty?  That's some classic trickle down bullshit, right there.

Chris22

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Re: Trickle down economics
« Reply #34 on: June 16, 2017, 08:32:30 AM »
The idea that the only thing standing between poor people and medicine and food is a bunch of rich people hoarding tax money so they can buy BMWs and yachts is simply absurd.  Even if we doubled everyone's taxes I have no confidence the federal government could use that money effectively to accomplish anything.

So your complaint is that the federal government doesn't spend it's tax revenues wisely, and you think that's the reason we have poverty in America?

Let's review.  You're literally asking the federal government to give more money to rich people than they currently get, because you think the federal government isn't doing enough to address American poverty?  That's some classic trickle down bullshit, right there.

Nope.  Not what I said.  I made no connection between tax revenues and poverty, you did, in your strawman/red herringfest above. 

My argument is simply that because I consider the government exceptionally incompetent at handling money, I have a real problem giving them more of it to piss away.  YOU made the claim that we have poverty because the government doesn't take enough money away from us, I am saying that A) no, that's not true, and B) even if we did give them more money they don't know how to spend it intelligently and efficiently anyways. 
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

TornWonder

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Re: Trickle down economics
« Reply #35 on: June 16, 2017, 09:01:48 AM »
If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?

A Definite Beta Guy

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Re: Trickle down economics
« Reply #36 on: June 16, 2017, 09:16:33 AM »
During a discussion, an uncle of mine on FB said "some economists support it."  Interested in learning and seeing other opinions I turned to google but could not find any evidence for it on the first two pages.  I politely told him as much and asked for a source, I did not get one, and he did not concede the point.

I think the US population may just have seen Ferris Bueller's Day Off with Ben Stein and the "laffer curve" scene one to many times.  That and everyone thinks one day they will be go-gillion-ares and then will want low taxes on the rich so best set low taxes on the rich now.

In SimCity cutting taxes can spur some growth but it really does not results in more tax income.  The best way to get tax revenue in the game is to either invest in education or get tons of pollution.  So there you go :-)

But really if there is good data to support Trickle Down please post a link, I would genuinely like to read it.

"Support" kind of implies a value judgment independent on positive effects. But, you're not going to find anyone supporting "trickle-down" economics, because "trickle-down" specifically is a rhetorical attack by left-of-center, specifically in the last few years.

Proponents will typically call their policies "supply-side." There are a couple pieces in here, but the three big ones (and they are distinct):
1. High government debt/deficit crowds out private investment.
2. High taxes discourage work/savings/investment.
3. Government spending inefficiently targets well-being.

These are all different. A lot different. You can totally think that taxes don't do a thing to discourage work, but that the government is still incompetent so taxes are essentially wasted. You also can think high deficits crowd out spending and be opposed to deficits and debt, but not be opposed to government spending per se. You can also think deficits don't matter, that government does a good job of spending money, but taxes are a big burden to growth.

Basically all three are different, you can pick and choose. Strong orthodox supply-siders believe all three.

#2 seems to be the most hotly contested, so here's a quick article that might provide some background:
http://voxeu.org/article/income-tax-and-labour-supply-let-s-acknowledge-what-we-don-t-know
Quote
Reading the recent empirical literature, I have been struck to find that while authors may differ on the magnitude of labour-supply elasticities, they largely agree on the sign. The consensus is that increasing tax rates usually reduces work effort.
Since labor is incorrectly spelled with a "u," you can probably guess this isn't some right-wing American source saying it.
This guy goes on to use some labor-leisure preferences to sorta say it's still undetermined, but my reading is that he's an outlier: consensus is tax increases discourage work. It's not at all clear how much, or among which groups. For example, women tend to increase their work hours more when taxes are cut/wages are higher. There's a lot of substitution effect there.

Even Sweden used a dynamic scoring (IE, tax cuts boost economic growth) when they did their tax reforms 20+ years ago.

The specific claim "tax cuts pay for themselves" is total bollocks. I don't know ANY serious economist who actually believes that. The Kansas situation doesn't really surprise anyone.

If you want to see the supply-side thought on Kansas, look here: https://www.forbes.com/sites/rexsinquefield/2016/07/18/kansas-an-unsung-hero-for-economic-growth/#2a0d003d58f4
Quote
Significantly, every year since the tax cuts were implemented, Kansas has surpassed the state record for new business formations. When we consider that startups have decreased nationwide since the Great Recession of 2008, this achievement is particularly remarkable. What’s more, the Kansas unemployment rate stands at 3.7% – the lowest the state has seen since 2001, and well below the national average of 5.5%.

I think economists generally think capital is more sensitive to taxes than labor but I'm less confident on that.

Also, keep in mind that even if you think tax cuts might raise GDP to some extent, that doesn't mean you'll think tax cuts/spending cuts are a good idea. If we cut taxes by $700 billion initially, raised GDP by $1 trillion, and got $200 billion back, we'd still have to cut Medicare by 5/7. Most people would think that's a bad trade-off.

I'm personally skeptical of broad-based labor tax cuts and think taxes should probably increase, given the pressure on public finances. But I'm also highly skeptical that any of the proposed social programs that are left-versions of voodoo economics (free college, single payer) will perform any better.

That sounds like a lot of sensible economics combined with a couple of American myths.

The big one is about single payer health care.   It seems to be pretty generally accepted that single payer health care works better than the US system in western Europe and Canada.    For definitions of better I suppose.   Up here the wealthy can always go to the states if the single payer system doesn't meet their needs.   For the other 99%, single payer works out better.

But I have to ask, are you American or English?   Labor is the American spelling, but bollocks is usually an English expression.

I'm American, hence the jab about the "u" in labour. :P
Also, I'm right-of-center in American politics, so I'm skeptical of all government spending and presumed government efficiencies...and highly skeptical additional government interventions will benefit me. I'm also skeptical of interventions in general, so I'm skeptical of virtually all medical spending, so I don't think ANYONE should be paying for it, let alone government at any level.
But that last part might not be relevant, so leaving that aside.
How exactly does single payer achieve efficiency? Asking this question, you usually get some mixture of arguments that are a short step away from all-out socialism (elimination of profits and marketing expenses) to government abusing a monopoly buyer position (monopsony in economic terms) in a way that's politically unrealistic and potentially harmful, or otherwise done in some fashion by insurers (insurance companies are already pretty big). Like, is the US federal government really going to implement a bunch of aggressive HMO-style cost controls? Is it really going to tell a drug maker to take a hike if it doesn't like the drug price? Yeah...I doubt it. Maybe the VA can get away with it, but I don't think the federal government would.
Otherwise a big insurance company could do just do the same thing today and make oodles of money.
Realistically, I don't expect the US to get any gains from expanding coverage, I expect it to just cost more. 

There's some pretty convincing arguments that health insurance doesn't work well in a private market format. And honestly, I wouldn't like a full free-market system. But that's not what the US has. The US has a mixture of subsidized employer-health systems, single-payer and subsidized insurance for seniors, health-care exchanges for individual policies, and means-tested managed healthcare programs.
And keep in mind, this system works out fine for me. I am an upper middle class white male that works out a corporation that gets a tax deduction. My wife is in the same position. We'd like to retire early, but one of us can keep working and still have reasonable access to health insurance. There will be Medicare when we hit the appropriate age.

Life expectancy stats bare this out pretty well. LE in Minnesota is 81, which is above the OECD average. So when people say the US healthcare system is broken...yeah, it costs me a pretty penny, but it works fine for me.

Same for, say, public education. Again, I live in a wealthy suburb with good schools: works just fine for me.

This is why "if you like your health care, you can keep it" was such a big promise. Because any intervention the government makes in my life can quite easily screw it all up, and it works pretty good as it is.

Sorry for the length of this post, just trying to present the right-of-center view here (which is going to be typical of suburbs that are middle class or above, which tend to be "swing" voters in elections).


ooeei

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Re: Trickle down economics
« Reply #37 on: June 16, 2017, 09:23:27 AM »
The very richest among us do not work harder than the poorest.  They are not more deserving.  Do you think trump is rich because he is a better human being than you are?

I've met quite a few rich, and quite a few poor people.  In my experience, the rich people have always worked harder than the poor people.  Obviously there are outliers in either situation, but I know at least 5 lazy poor people I've talked to in the last two weeks who skip work all the time and take sick days like they're going out of style.  They also quit jobs for all sorts of weird reasons, and have no desire to do beyond the bare minimum required of them.  I don't know any rich person who takes more than a couple weeks of vacation a year, and usually not that much.  Granted I don't know all that many rich people compared to poor people, but I frequently I see them working from 6-7 until 6-7 every day or more and being on their cell phones or email after those hours.  A few of them also have heart problems from all of the stress and their poor diet/health, largely due to a lack of time to do those things.  Workaholic is a good description.

I'm not saying that taxes need to be cut for rich people, but the idea that the only reason poor people are poor is because of our laws and taxes is ridiculous.  If you gave everyone a "do over" and split up all the money evenly among rich and poor people today, I bet 90% of people would be back where they started within 2-3 years.  Granted, I think we need to make it easier for that extra 10% to move up where they need to be, and I'm all for single payer healthcare and more taxes on the rich.  I'm just not under any delusion that rich and poor people are basically the same except for their salaries. 

How exactly does single payer achieve efficiency?

You could ask one of the dozens of countries that does it successfully at a much lower cost than the United States.  It's not like this is a pie in the sky theory, it's being done all over Europe, and even in Canada which is our next door neighbor.
« Last Edit: June 16, 2017, 09:27:44 AM by ooeei »

Fireball

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Re: Trickle down economics
« Reply #38 on: June 16, 2017, 09:27:08 AM »
If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?

Good question.  Maybe for the same reason that those people who believe paying more taxes will not help solve some of the problems in our society, then never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems.   
« Last Edit: June 16, 2017, 09:53:48 AM by Fireball »

MasterStache

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Re: Trickle down economics
« Reply #39 on: June 16, 2017, 09:46:49 AM »
My argument is simply that because I consider the government exceptionally incompetent at handling money, I have a real problem giving them more of it to piss away. 

Just curious but shouldn't that apply to CEO's etc. as well? I agree the government is terrible with handling money. I am not sure anyone will argue that. But the concept of trickle down is tax cuts for the rich will somehow benefit the not rich folks weather by hiring more people and/or paying them more is completely bullshit. The problem though doesn't stop there. If the government collects less revenue through tax cuts for the wealthy then they either have to A. Reduce spending or B. make cuts elsewhere or some combination of both. What is often proposed is cuts to programs that benefit the poor/middle class .

With this strategy you essentially have a situation where the rich keep more of their own money and the poor keep less of their own money. Sure give them tax cuts as well. But since they make very little the tax cut is mostly meaningless. And cuts to programs they rely on will eat that away in no time, plus more. The new healthcare bill is a great example of this. Tax cuts for the rich, jack up rates and kick those off who can't afford it.   

A Definite Beta Guy

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Re: Trickle down economics
« Reply #40 on: June 16, 2017, 09:56:28 AM »
Quote
You could ask one of the dozens of countries that does it successfully at a much lower cost than the United States.  It's not like this is a pie in the sky theory, it's being done all over Europe, and even in Canada which is our next door neighbor.

You're snipping out a rather significant part of my post. Regardless, you can't just import the Canadian health-care system by changing a financing mechanism. You will get the American healthcare system, with a different financing mechanism. It will have a distinctly different character than any other national single payer system.

Expenses also vary dramatically between other OECD nations, and other OECD nations still have rising healthcare expenditures.

EDIT: I should add that I wouldn't mind having a European system, since it's cheaper and does a good enough job. It'd match my preferences. That doesn't mean I have any faith the US can implement one.
« Last Edit: June 16, 2017, 10:01:14 AM by A Definite Beta Guy »

Chris22

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Re: Trickle down economics
« Reply #41 on: June 16, 2017, 10:03:47 AM »
My argument is simply that because I consider the government exceptionally incompetent at handling money, I have a real problem giving them more of it to piss away. 

Just curious but shouldn't that apply to CEO's etc. as well? I agree the government is terrible with handling money. I am not sure anyone will argue that. But the concept of trickle down is tax cuts for the rich will somehow benefit the not rich folks weather by hiring more people and/or paying them more is completely bullshit. The problem though doesn't stop there. If the government collects less revenue through tax cuts for the wealthy then they either have to A. Reduce spending or B. make cuts elsewhere or some combination of both. What is often proposed is cuts to programs that benefit the poor/middle class .

With this strategy you essentially have a situation where the rich keep more of their own money and the poor keep less of their own money. Sure give them tax cuts as well. But since they make very little the tax cut is mostly meaningless. And cuts to programs they rely on will eat that away in no time, plus more. The new healthcare bill is a great example of this. Tax cuts for the rich, jack up rates and kick those off who can't afford it.

What if there was a magical third option, where the government had to become more efficient with the money it did receive?  The reason this doesn't exist today is because the government knows that if they ask for more money, ~50% of the country will demand and vote that we (not necessarily the same 50%) give it to them.  It would be like turning a 5y/o loose in Toys R Us and never telling them "no".  OF COURSE they'll spew money like it's water.  What if instead we said "hell no, fucksticks, you get nothing until you show up how you're going to provide the same level of service you do now for 20% less cost."  Maybe then they'd figure out how to do it efficiently, AND THEN we could have the conversation about how much more money they really need.


FWIW, I don't really believe in "trickle down economics" but I do believe in "let people hang on to as much of their own money as possible because they know better what to do with it than the government."
"If I could get all the money back I ever spent on cars, I'd spend it on cars." - Nick Mason

ooeei

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Re: Trickle down economics
« Reply #42 on: June 16, 2017, 10:08:55 AM »
Quote
You could ask one of the dozens of countries that does it successfully at a much lower cost than the United States.  It's not like this is a pie in the sky theory, it's being done all over Europe, and even in Canada which is our next door neighbor.

You're snipping out a rather significant part of my post. Regardless, you can't just import the Canadian health-care system by changing a financing mechanism. You will get the American healthcare system, with a different financing mechanism. It will have a distinctly different character than any other national single payer system.

Expenses also vary dramatically between other OECD nations, and other OECD nations still have rising healthcare expenditures.

EDIT: I should add that I wouldn't mind having a European system, since it's cheaper and does a good enough job. It'd match my preferences. That doesn't mean I have any faith the US can implement one.

I agree with you there, I just think we need to be careful in how we phrase what we're looking for.  I'm not suggesting we'll get the best healthcare system in the world, or something cheaper than in Europe, or that it won't have problems.  I just find it very hard to believe it would be worse than our current system.

Most people I know who don't want to go to a single payer system are either old and rich, or are very healthy.  I've had to deal with friends and family members doing the doctor thing a lot in the last year, and it's MISERABLE.  You basically have to be an expert at navigating forms and insurance and scheduling and yada yada yada to get anything done, even then it's awful.  My girlfriend finally buckled and paid an extra $1000 for a scan she had recently just because going through all of the insurance paperwork and back and forth wasn't worth it. 

I'm not saying people in the UK don't have problems with their system, I'm sure they do, but I've asked at least a few of them if they'd prefer our system and the answer is always a resounding "Hell no" usually with them laughing.  The same for Canadians, hell even the people in Costa Rica I've talked to have no desire for American healthcare.

TornWonder

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Re: Trickle down economics
« Reply #43 on: June 16, 2017, 10:13:41 AM »
If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?

Good question.  Maybe for the same reason that those people who believe paying more taxes will not help solve some of the problems in our society, then never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems.

Except your argument doesn't have much basis in reality as American Conservatives are the among the most charitable people on Earth.  The people begging for the government to take care of it tend to be less charitable.

Wexler

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Re: Trickle down economics
« Reply #44 on: June 16, 2017, 10:20:57 AM »

FWIW, I don't really believe in "trickle down economics" but I do believe in "let people hang on to as much of their own money as possible because they know better what to do with it than the government."

Eh-I'm not so sure about that.  I think that the average retirement savings in the US, one of the richest countries on the planet, tells you a lot more about whether people actually know better.  I am eternally grateful that our country treats most of our populace like children in retirement and provides a subsistence-level income and healthcare for the elderly.  I am also confident that many elderly people would starve without the government actually knowing better than they do what's good for them. I think our current system of progressive taxation is the best compromise.  Let people keep most of their money, particularly those who need it most, but be there when they screw up or experience hardship.

Fireball

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Re: Trickle down economics
« Reply #45 on: June 16, 2017, 10:31:27 AM »
If people actually believe that giving more money to the government is the right thing to do and that it will help solve some of the problems in our society, why have I never met a single person that has knowingly paid one cent more than they were legally required to pay in taxes?

Good question.  Maybe for the same reason that those people who believe paying more taxes will not help solve some of the problems in our society, then never pay that same money to homeless shelters, poverty programs, etc. or otherwise make an attempt at solving those same problems.

Except your argument doesn't have much basis in reality as American Conservatives are the among the most charitable people on Earth.  The people begging for the government to take care of it tend to be less charitable.

Except your argument doesn't have much basis in reality as my statement didn't specify that charitable giving was a conservative or liberal trait.  Because it's not. I try not to make blanket statements about either party. But, to your point, the American Conservative is certainly known worldwide for taking care of the sick, poor and needy. 
« Last Edit: June 16, 2017, 10:35:33 AM by Fireball »

MasterStache

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Re: Trickle down economics
« Reply #46 on: June 16, 2017, 10:54:59 AM »
My argument is simply that because I consider the government exceptionally incompetent at handling money, I have a real problem giving them more of it to piss away. 

Just curious but shouldn't that apply to CEO's etc. as well? I agree the government is terrible with handling money. I am not sure anyone will argue that. But the concept of trickle down is tax cuts for the rich will somehow benefit the not rich folks weather by hiring more people and/or paying them more is completely bullshit. The problem though doesn't stop there. If the government collects less revenue through tax cuts for the wealthy then they either have to A. Reduce spending or B. make cuts elsewhere or some combination of both. What is often proposed is cuts to programs that benefit the poor/middle class .

With this strategy you essentially have a situation where the rich keep more of their own money and the poor keep less of their own money. Sure give them tax cuts as well. But since they make very little the tax cut is mostly meaningless. And cuts to programs they rely on will eat that away in no time, plus more. The new healthcare bill is a great example of this. Tax cuts for the rich, jack up rates and kick those off who can't afford it.

What if there was a magical third option, where the government had to become more efficient with the money it did receive?  The reason this doesn't exist today is because the government knows that if they ask for more money, ~50% of the country will demand and vote that we (not necessarily the same 50%) give it to them.  It would be like turning a 5y/o loose in Toys R Us and never telling them "no".  OF COURSE they'll spew money like it's water.  What if instead we said "hell no, fucksticks, you get nothing until you show up how you're going to provide the same level of service you do now for 20% less cost."  Maybe then they'd figure out how to do it efficiently, AND THEN we could have the conversation about how much more money they really need.


FWIW, I don't really believe in "trickle down economics" but I do believe in "let people hang on to as much of their own money as possible because they know better what to do with it than the government."

Too bad the government doesn't run on pixie dust and unicorn farts eh?

Trickle down is not really a belief. And I think your statement that folks are better with their own money than the government is extremely subjective. You could easily find cases to support either side. Government funds needless wars and baseless spending, but also provides critical services to needy folks, provides medical research funding that leads to finding cures for diseases saving countless lives. There is no way you could quantify such a belief.

So we are stuck with the system we have, because that is reality. And I think rich folks should pay more. In some cases a hell of a lot more. I don't think they should get to keep more of their own money if it means poorer folks get to keep less.     
« Last Edit: June 16, 2017, 10:56:32 AM by BeginnerStache »

RangerOne

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Re: Trickle down economics
« Reply #47 on: June 16, 2017, 02:48:27 PM »
Wealth is not however being simply transferred from the rich to the poor.

If you're literally cutting taxes on the upper income bracket, how is that not transferring wealth to the rich?

I said from rich too the poor. The claim is that it trickles to the poor which would be a transfer of wealth. I never implied the converse wasn't true.

I personally wouldn't call a tax cut for income people a "transfer of wealth". Even though I think the net effect is what you say. We are allowing high income earners to keep more money which will do nothing to improve the lives of those making less than them. While having to cut potentially useful government programs due to a loss in revenue.

I am not really much an ideologue when it comes to the issue of taxation. I would rather see it as a complex system in constant need of tweaking and debate to try to get the desired result.

RangerOne

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Re: Trickle down economics
« Reply #48 on: June 16, 2017, 03:08:33 PM »
we can keep being progressive about the taxes all the way up to 90% or so.

Philosophically I disagree there should ever be a bracket over 49.9% on earned income.  I don't think the government should ever be entitled to half (or more) of something someone earned.

I find 50% to be a fairly arbitrary number. Why not less? There are some that would say that even a 1% difference in taxes between a low wage earner and a high wage earner is inherently not fare.

There is no magical set of tax brackets in our current tax system that will make them fair. Though I suppose some might argue the fair amount would be to squash it to one flat tax bracket.

But then you have to deal with the problem of making up that revenue from other form of taxes or massively shrink Federal government. A consumption focused sales tax bears the risk of being far more regressive and may squash social mobility.

Intrinsically I agree I would have no interest earning money for a government that was taking 90% of it. Technically arguing for any change to our tax system no matter how minor is fraught with upsides and downsides.

Philosophically I think the number one priority when it comes to changing the flow of revenue into say the Federal, State or Local government should be maintaining or improve social mobility.

If you find your tax plan is taking away government funding and forcing say cuts to education programs, scientific research, and social welfare then there is a good chance you are harming social mobility for those with less means. That is especially questionable if those changes are primarily helping a group already doing very well.

scottish

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Re: Trickle down economics
« Reply #49 on: June 16, 2017, 03:55:58 PM »
A 50% marginal tax rate is high enough to be annoying.    It would be more tolerable if government waste was less obvious.   If you could see the money going to useful things all the time you could feel good about it!    But when government bureaucrats take 4 weeks to reply to an e-mail...   Or the city government spending money replacing perfectly good sidewalks...   Or hundreds of millions for security at a G8 meeting...    and so on.