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20 year study of global wealth demolishes the myth of ‘trickle-down’

businessinsider.com

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Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#111

Post by rsfern »

q1w2 wrote: post #44
romwell wrote: post #28

Earlier quoted context omitted.

>I haven't heard a politician advocate trickle-down since the Reagan era Which country are you from? Certainly not the US, are you? It's called "cutting taxes" these days, with the tax cuts being mostly applied to the ultra rich. The entire Republican party economic agenda still preaches trickle-down. If only because they are doing everything they can to prevent Reagan's trickle-down policies from being reverted. > 2…

Any tax cuts are trickle down? So the Democrat's push to reinstate the SALT tax credit (cut) are trickle down also? Are tax cuts in any bracket trickle down? When the GOP raises taxes - do they implode?

To be fair, GP did use scare quotes to denote “tax cuts”. The specifics of the tax policy matter, to your point, but I do think it’s kind of common to frame this sort of trickle down attitude in terms of cutting specific taxes

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#112

Post by bojangleslover »

Here is an example of the opposite of "trickle down":

I am self employed so I get paid everything then have to pay my own tax. Aside from the sticker shock this has some effects.

Toward the end of the year when my marginal rate cracks 50% I get a lot more generous. I tend to but more kit, and hire people for gigs. I may even hire an EA next year and pre-pay her at the end of this year. If faced with either saving an extra 20k or hiring an EA and paying her 50k, I am more inclined to the latter.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#113

Post by foverzar »

AnIdiotOnTheNet wrote: post #104
codegrappler wrote: post #2

I guess I’m not surprised that a bunch of folks who have made a career out of advising politicians on income inequality….discovered income inequality in their study. The two questions in my mind are: 1. Should we trust the government to spend the money more wisely than the folks who earned it? Or said another way, how do you combat the almost inevitable corruption you see with large government spending? 2. What will…

> Should we trust the government to spend the money more wisely than the folks who earned it? When the aristocracy watched as the new-born communist Russia brutally executed its royal family, in their hearts they knew their narrative of birthright and nobility would no longer be accepted. They needed a new reasoning to justify their positions of power, to convince the peasantry that their lords were just and inevitab…

> Thus was the narrative of 'meritocracy' born in a world where there is obviously no possibility of such a thing.

How is it "obviously"? All the business relations between people are inherently meritocratic. Not only relations, the whole principle of "you reap what you sow" is inherently meritocratic: you have to put in some merit to generate value in return.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#115

Post by throwaway98797 »

bottled_poe wrote: post #92
codegrappler wrote: post #2

I guess I’m not surprised that a bunch of folks who have made a career out of advising politicians on income inequality….discovered income inequality in their study. The two questions in my mind are: 1. Should we trust the government to spend the money more wisely than the folks who earned it? Or said another way, how do you combat the almost inevitable corruption you see with large government spending? 2. What will…

> Should we trust the government to spend the money more wisely than the folks who earned it? Yes. > Or said another way, how do you combat the almost inevitable corruption you see with large government spending? Transparent auditing of taxpayer funds. Presumably this exists to some degree in your country. > 2. What will incentivize people to work at insane rates if the vast majority of their income and wealth is tax…

Not all people aiming for $1m+ in earnings are doing it for a safety net.

Some people like to compete for the heck of it.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#116

Post by romwell »

bottled_poe wrote: post #77
romwell wrote: post #10

Ahh, the good old trickle-down, aka "piss in my eyes and tell me it's raining" (which is the only way trickle-down actually works). It was pure mythology from the start; there's never been any basis for it to begin with. It's a pity we even have to debunk it like that. Go figure, give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. Give a billionaire $20M, s…

While I want to agree with you, you’re comment is just hyperbole/rhetoric and no substance.

While I want to agree with you, it so happens that your comment is just hyperbole/rhetoric and no substance.

The substance of my comment is a simple model that explains why trickle-down doesn't work.

If it helps, I'll add some references to support my argument:

[1] TFA

Thank you for the effort you put into providing your feedback.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#117

Post by jpadkins »

One observation I have on this topic and how the corp. media (vox, et al) handles the topic: The proposed solutions are always along the lines of increased income taxes, which impact people who are getting wealthy (high earning doctors, execs, entrepreneurs, etc). I rarely see discussion from corp. media on wealth taxes, which would impact the already wealthy. It is not widely known that billionaires don't have large "incomes" and therefor don't pay large relative amounts of income tax.

The interesting outcome of this policy approach, is it's actually protecting the ultra rich from more competition (more wealthy people competing for influence & assets). Which means billionaires can maintain more socio-political control with their wealth with very high marginal income tax rates. Billionaires (who want to maintain power) do not want a lot more millionaires.

The next time a progressive advocates for high marginal income tax rates, ask them why they want to protect the 1% from competition. :-)

Edit: My personal preference is a 0.05% tax on any transfer between a LLC and it's owners (dividend, buyback, payroll to stockholders, or equivalent). I would also insist that this new tax be only allowed to flow to a direct citizen payment fund e.g. universal income (as I don't believe the captured bureaucracy will use it effectively or not just end up redirecting it back to billionaires). And for my liberty minded friends, think of it as a payment for limited liability protection for the owners (something that doesn't exist in a true free market. a government intervention that helps crony capitalism in some manner). If owners of a company want to avoid the tax, they can incorporate where their wealth is at risk for the damages their org does.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#118

Post by elzbardico »

chii wrote: post #39
romwell wrote: post #10

Ahh, the good old trickle-down, aka "piss in my eyes and tell me it's raining" (which is the only way trickle-down actually works). It was pure mythology from the start; there's never been any basis for it to begin with. It's a pity we even have to debunk it like that. Go figure, give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. Give a billionaire $20M, s…

> give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. if there wasn't enough food in the first place, then the $20m just got inflated. This 20m will not go towards investment in higher food productivity when given to individuals like that. Give this 20m to "the rich", they will invest it in food creation machinery. At least there would be more food produced…

No man. The Javascript programmers in HN saw a paper in economics they agree with, although they could barely comprehend it if they actually tried to read it. They know better. you're wrong.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#119

Post by UncleMeat »

codegrappler wrote: post #2

I guess I’m not surprised that a bunch of folks who have made a career out of advising politicians on income inequality….discovered income inequality in their study. The two questions in my mind are: 1. Should we trust the government to spend the money more wisely than the folks who earned it? Or said another way, how do you combat the almost inevitable corruption you see with large government spending? 2. What will…

> Would I be willing to put in the long hours and sacrifices usually required to work up to a $1m+ salary if it’s taxed at a 90% rate?

I'm paid more than ten times what the local movers are paid. I'm very confident that they work harder, with fewer breaks, and less control over their hours than I do. My wife is a professor. In the evening she is consistently grading papers while I am messing around on the internet. Her salary is like 15% of my income.

I have not observed a correlation between harder work and higher pay.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#120

Post by throwaway0a5e »

Werewolf255 wrote: post #73
syshum wrote: post #58

Earlier quoted context omitted.

So if I worked as a doctor for 20 years, invested most of my income in that 20 years in to dividend paying stocks, then at age 45 or so retire to live off my dividends that my hard work paid of, I did not earn any of that?

I mean, no? In this specific example, the doctor is buying instruments which derive their interest from exploiting the labor and capital of those in the offering company, and after 20 years, the doctor is just living off others work because he 'earned it'. Plus, of course, in this perfect market scenario, no crashes or corrections can ever occur.

So say the doctor fronts someone money so they can invest in a business, say buying more garbage trucks for their garbage truck fleet or something. Surely the return on that is earned income?

Throwing the money at your preferred wall street instrument of choice is the same thing but with half a million layers of abstraction and redirection all of which involve middle men who either take cuts or otherwise get paid for sorting and bundling, matchmaking, providing liquidity, etc, etc.

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