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50 years of tax cuts for the rich failed to trickle down, economics study says

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Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#81

Post by jariel »

partiallypro wrote: post #68
mikestew wrote: post #4

Perhaps I'm having a Mandela Effect moment, but hasn't "trickle down" been debunked before this study...repeatedly? Not just "no shit", but actual studies and stuff? Regardless, Will Rogers is credited with the phrase "trickle down" to refer to supply-side economics, so it has gone on longer than 50 years. Mr. Rogers also did not mean the turn of phrase to be complimentary.

"Trickle down" is an economic slur, it's not something economists believe. It's just what some people call a certain policy set.

The term they use is 'supply side' economics - meaning, you support businesses with tax cuts, subsidies, Quantitative Easing, then the 'core' economic mechanisms are healthy, people get hired (i.e. trickle down).

As oppose to 'demand side' i.e. give tax cuts or money to the poor - they spend it, the economy grows.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#82

Post by wffurr »

AnthonyMouse wrote: post #59

> The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes. All of these studies consistently miss one thing. Effective tax rates haven't really changed since before Reagan. Prior to Reagan, the tax code was riddled with loopholes. Not like how it is now wh…

The actual paper where you can read their analysis for yourself: http://eprints.lse.ac.uk/107919/1/Hope_economic_consequences...

That's a nice just-so story, but it's not supported by the evidence. You can read for yourself in the original paper, but the authors used a pretty sophisticated approach to measuring taxes:

" We propose an encompassing approach that utilises Bayesian latent variable analysis on a range of different taxes and indicators to overcome these problems. This allows us to detect shared variance across 7 indicators that are commonly used proxies for taxes on the rich (see Table A1 in the Appendix)"

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#83

Post by belltaco »

konfusinomicon wrote: post #24

Now that the rich are used to lower taxes, if the government raises them won't the extra costs they incur just end up being passed down to the consumer via higher cost of goods/services from the businesses owned by said rich people?

What's stopping them from doing that right now and pocketing the extra money? They're not in it for charity, if they think they'd make more money, they'd do it already. It's the supply demand curve they're trying to optimize for.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#84

Post by metiscus »

marcosdumay wrote: post #66
pkaye wrote: post #6

Wouldn't trickle up economics work better? Poor people have more unmet needs and more likely to spend any extra they get into the economy.

Isn't the answer of this one known since the time of Keynes? That's basically what pulled the rich countries out of the Great Depression.

There is ongoing and significant debate about exactly that question.

Here are some links from across the spectrum of opinion.

https://www.nas.org/blogs/article/ask_a_scholar_did_the_new_...

https://www.theatlantic.com/ideas/archive/2019/03/surprising...

https://fee.org/articles/fdrs-folly-how-roosevelt-and-his-ne...

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#85

Post by wffurr »

Frustrating that CBS couldn't be bothered to link the actual paper: http://eprints.lse.ac.uk/107919/1/Hope_economic_consequences...

A better link might be London School of Economics' press release: https://www.lse.ac.uk/News/Latest-news-from-LSE/2020/L-Decem...

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#86

Post by jariel »

durnygbur wrote: post #32

The rich prefer to hire armies of accountants and lawyers to design the most hermetic pipeline funelling out everything they consider to be an excess. There is not a single droplet dropping, how could anything tricke down?

Jobs. Before COVID, the US had historically low unemployment and high material standard of living (despite asset share growing in the 1%).

Even accounting for different ways to count unemployment, the US, generally a somewhat lower tax jurisdiction, tends to have lower unemployment and higher salaries. (Healthcare of course is the big ticket item generally not well accounted for in the comparisons)

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#87

Post by profile53 »

soared wrote: post #41
11thEarlOfMar wrote: post #36

This is only tangentially on topic, but I genuinely wonder about this. When people state that they want the wealthy to pay their fair share, the first two questions I have are, what constitutes wealthy and what constitutes fair? Let's take a specific person as an example of wealthy (let me know if you don't agree), and I'd be grateful to hear your thoughts: Wealthy Person X: - CEO, 55 years old, University of Illinoi…

This doesn’t seem like a question inviting genuine discussion. Tax laws don’t take into account how hard someone works, where they went to school, or a taxpayers character. Unless your argument is that taxes should be based on factors outside of income/etc, it seems like you might be trying to bait people with some version of “Look how hard Steve works - you can’t possibly support raising taxes on him.”

I think that’s exactly what the parent commenter is saying, but I don’t think it is wrong to discuss per se. Consider 3 people:

- Morgan. Worked 80 hour weeks for 40 years developing treatments for childhood cancer. Runs a charity supporting orphanages in their free time. Net worth: 8 million, income: 1 million

- Sam. Started the largest pornography empire in the world and works as the CEO. Accused of child sex trafficking on multiple occasions, but no proof. Net worth: 8 million, income: 1 million

- Jordan. Their great grandparents started a mining company and they inherited a trust fund. Never worked in their life. Net worth: 8 million, income: 1 million

I’m willing to bet people would have value judgements on how much each person should pay in taxes. People do tie moral, emotional, or ethical considerations to what they consider fair. I personally believe these three people should be taxed almost the same, as the value judgements should have an impact elsewhere. I think estate/wealth taxes would be the only case where there should be a divergence, as they would only apply to the third person. What do you think?

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#88

Post by marcosdumay »

eloff wrote: post #17

I'm really curious how many of our democracies fail in this specific case. There aren't a lot of wealthy people, so if politicians are pandering to the majority, this is the wrong call. It's well known not to work for a long time, so logically it's also the wrong call. Are most politicians wealthy? Is that why they seem to overly protect the interests of this group over the rest of the population? Straight up self-in…

> Are most politicians wealthy?

I suggest you look this one up.

Where politicians are not wealthy, taxing rich people happens more often. But I don't think the causality goes the way you imply there.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#89

Post by gt565k »

They did trickle down, to the highest valuations of companies, leading edge technology, and high stock prices.

If you're a middle class american without a brokerage / investment account. You are getting shafted.

Immigrants in the USA are especially risk averse when it comes to investing in the stock market, because the countries they come from are corrupt and they have been screwed in the past. It's amazing how many Americans with the means to invest in the market, would rather eat out every day, buy a new car and iphone every 1-2 years, drown in debt, and fail to reap the rewards of capitalism. Not investing in companies through the stock market is the very definition of not taking advantage of the capitalistic society we live in.

K-12 education in the US should have a mandatory course on the financial market and educate people about the tax advantaged accounts available to them. Of course, this is like the government pouring gasoline on its own fire, so it will never happen. Why? Because the govt has no incentive to help you reduce your tax burden, while reducing their tax revenue.

People don't have a clue about 401k, HSA, Roth IRA, Back-door Roth IRA, 529 college savings accounts, student interest deductions, brokerage accounts and capital gains tax, and the advantages of each.

Credit is horrible to the financially illiterate consumer, but is empowering to those that understand economics and capitalism, avoid consumerism, and understand how to invest capital and make a return.

Re: 50 years of tax cuts for the rich failed to trickle down, economics study says

#90

Post by 0x6862 »

pmoriarty wrote: post #25
imtringued wrote: post #13

Earlier quoted context omitted.

It's just an excuse to justify selfish tax policy that favors the wealthy. It obviously doesn't work because the wealthy don't have to invest into domestic jobs. They can also use their money abroad. If you give them more money they are just going to spend more of it outside your country. The opposite is also true. The vast majority of consumers spend their money domestically. Yes the products they buy are often impo…

"It obviously doesn't work because the wealthy don't have to invest into domestic jobs. They can also use their money abroad." They can also just hoard most of it and pass it on to their descendants -- this is how you get dynasties. Tax havens and creatively constructed foundations are another way of making sure the government never gets ahold of their money.

Sure the rich hold some gold & BTC but most of their wealth is in investments (stocks, bonds, infrastructure etc.) to generate positive real returns - given inflation. This is far from hoarding
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