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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

#121

Post by gutino »

The article is fundamentally wrong, the only way whealth would not trickle down is if the rich will bury their money or destroy it. Think about it:

> When the rich buys a Yat, cars, houses, vacation, -> give money to those who produces those goods/services.

> When the rich saves money, typically it does through financial instruments, which we use it to fund our projects, home, buys etc.

> A great portion of the whalth is working capital which are used for all the employes that work with them, producing earning for everyone.

> Many billionaires have stock valued in billions but those stocks if they are sold by them, will get them lower the value.

The concept of ownership does not mean that other can not use it. The real question is what % of the whealth is EXCLUSIVELY used by the rich

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

#122

Post by 11thEarlOfMar »

ogre_codes wrote: post #45
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…

If he makes $1.5m/ year and his net worth is only $8m, he's not very good with money. My feeling on taxes is likely overly simple. Take the median price of a home in the area and divide it by 4. If people make less than that, they shouldn't pay any taxes. Then people should pay flat rate for every dollar above that.

That's interesting.

The median home price in the US (it varies dramatically by region, I need to simplify first) is $295,000. Divided by 4 is about $74,000.

The median household income (using household since you're using house prices) is $69,000.

The actual numbers would need to change for this to work, maybe it needs to be 1/10th the median home price as the threshold, for example.

But it's interesting to think through the impact this type of approach would have on home prices. I'm confident the tax rates and taxable thresholds could be worked out to generate the revenue needed, but to what extent would people be incentivized to move to areas with lower home prices?

Taking an extreme example, the median home price in Santa Clara County is $1,395,000. If we use the 10% threshold, families would not pay taxes if their household income were below $139,500. The median household income is $124,000.

Income and housing prices are not linearly corelated, so it would need some type of non-linear scaling. But at the heart of it, housing is generally the greatest family expense and perhaps it makes sense to use that in the approach to taxing income. Come to think of it, perhaps that's in effect what the mortgage interest deduction does.

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

#123

Post by 11thEarlOfMar »

otikik wrote: post #91
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…

The answer is always the same: a gradual tax on his income. So the first, say, 40k he pays is taxed at, say 10%. The next 60k at 15%. And so on. Don't concentrate on the numbers, concentrate on the concept: As brackets go up, the higher the taxed percentage. It never comes to 100% but it should be quite high after the first million. Why I think this is fair? Because it is no longer possible for people to "put themsel…

I'm curious about the notion of becoming wealthy by extracting wealth. Here are four ways to increase one's wealth, which of the four is an extraction:

1. Earning a salary. Generally speaking, the larger the organization and the higher the position the higher the salary.

2. Investing in stock. The more a company grows, the more valuable the stock becomes, the more the investor's stock is worth.

3. Owning a home. The more people there are, and the more desirable a location is, the more valuable the property is, and the more the home is worth.

4. Owning a business. The harder and smarter your work, the more the business is worth. As the owner, that grows your wealth.

How do these methods of increasing wealth make it worse for other people? Or are you referring to another way? For example, a drug pusher who gets people hooked and then sells them drugs is for sure extracting. Or a monopolist who can charge any price he wishes is extracting if he chooses to exploit that position.

However, the majority of wealthy people are not of that type.

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

#124

Post by johndevor »

standardUser wrote: post #92
johndevor wrote: post #39

Earlier quoted context omitted.

Cars, computers, cell phones, rockets to mars, etc... all exist because rich people bought the super expensive first versions or funded their development. We all benefit from those things greatly.

Sure, having a few million bucks kicking around lets a small class of people contribute to the commercial development of some types of products. Having a few billion dollars kicking around does not yield such benefits.

> Having a few billion dollars kicking around does not yield such benefits.

Sure it does - they reinvest that money into companies who develop technology.

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

#125

Post by mikestew »

vinhboy wrote: post #75
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.

I've been trying unsuccessfully to sell this idea to my cohorts with regards to the stimulus check. My argument is, giving poor people money is a guarantee win for the community, because poor people live paycheck to paycheck and that money will be spent immediately. No one buys my idea because it's always something like, "I don't trust them", or "why does that lazy guy deserve any money".... I am not sure how to win…

Win? You're not going to win that argument because it isn't set up for you to win. The argument boils down to "they are undeserving". Good luck convincing someone that the person in question is, in fact, deserving because the goal posts will just get moved. Okay, go with something along the lines of "people shouldn't starve in the streets, deserving or not". And you'll be shocked at what a fellow human being will respond with.

You're basically asking, "in a time of crisis, could we quit being dicks to each other if only for a little bit?" And the answer from many will be a resounding, "nope".

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

#126

Post by specialist »

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…

> All of these studies consistently miss one thing. Effective tax rates haven't really changed since before Reagan.

I'm not following you. You've cited stable effective income tax rates and gross federal tax receipts.

OC says supply side policies led to greater inequity.

Do your cites refute their claim?

Mea culpa: I don't understand this OC's measure of inequity. I'd be grateful if someone could do an ELI5 comparing it to the Gini coefficient. https://en.wikipedia.org/wiki/Gini_coefficient

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

#127

Post by 1vuio0pswjnm7 »

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…

"Prior to Reagan, the tax code was riddled with loopholes."

A friend who used to work at DOJ many years ago told me that the greatest ever expansion of the US tax code was during the administration that came in after Reagan.

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

#128

Post by RhysU »

wing-_-nuts wrote: post #69
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…

>put self through college working >Works 60 hour weeks, most Saturdays, some Sundays ... I don't give a damn about the 'pull yourself up by your bootstraps and work hard' virtue signaling. Half. He should pay half. So should everyone else above 400k / yr. The rich are able to succeed by virtue of the fact that we have schools, roads, other infrastructure. If you're in the top 1% of income, you should pay in the top 1…

Why is $400K the morally correct number?

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

#129

Post by Florin_Andrei »

souprock wrote: post #105
Florin_Andrei wrote: post #29

Earlier quoted context omitted.

The way church and state are supposed to be separate (lots of potential comments here, but let's move on), we should have a separation of money and politics. And for reasons that are quite similar. It's a public office, where public servants work, for the good of everyone, not for personal enrichment. It's a job just like all the others. It should not be a place where oceans of cash keep sloshing around. No more lobb…

That thinking led to the corruption. Any normal senator, governor, or president has the skills to work at a high level in corporate America. That pays better, counting only the legitimate pay. It should be no surprise that voters are seldom able to hire (elect) anybody non-corrupt. We aren't paying market rate for the desired skills or for the level of responsibility. Senators get about $200,000 and the president get…

> Senators get about $200,000 and the president gets about $400,000.

That's a heck of a lot of money for the vast majority of people.

If that's the real issue, then we're attracting the wrong kind of people to those jobs. Let them stay at the hedge fund instead, do hopefully more limited damage there.

> You get what you pay for.

No, not always. And it's precisely this narrow vision, this absolutization of money that's one of the major causes of the woeful state of the world nowadays.

People in government ought to be focused on doing what's good for the nation, first and foremost. If they go "well, $200k isn't enough for me to do this job", kick them out. That's precisely the wrong kind of person for the job.

I think actually the oodles of money being pumped into politics these days are responsible for drawing some awful characters to it. Remove that motivation, and perhaps you'll have people with very different goals running the show.

You get what you, collectively, value and believe in. America believes in money above all. Well, yeah, then the piles of cash end up ruling supreme. Good luck fixing that mess.

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

#130

Post by dragonwriter »

souprock wrote: post #105
Florin_Andrei wrote: post #29

Earlier quoted context omitted.

The way church and state are supposed to be separate (lots of potential comments here, but let's move on), we should have a separation of money and politics. And for reasons that are quite similar. It's a public office, where public servants work, for the good of everyone, not for personal enrichment. It's a job just like all the others. It should not be a place where oceans of cash keep sloshing around. No more lobb…

That thinking led to the corruption. Any normal senator, governor, or president has the skills to work at a high level in corporate America. That pays better, counting only the legitimate pay. It should be no surprise that voters are seldom able to hire (elect) anybody non-corrupt. We aren't paying market rate for the desired skills or for the level of responsibility. Senators get about $200,000 and the president get…

So, you want literally every top decision maker in federal government to have a massive financial incentive to, even if honest, strive only to maximize GDP with no concern for distribution or other outcomes, and, if less honest, manipulate and protect the manipulation of GDP data.

That’s...a fantastically bad idea.

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