Does trickle down work?

[FChumChum]

No posting for net worth <750k or income less than 200k.

These people are getting rich by saving the money they have - not all of a sudden spending like an idiot now that they have more $$ in their pocket.

[isingmodel]

Supply side economics in the way it is typically conceptualised evidently does not work, no.

[tk217]

Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes and decreasing regulation. According to supply-side economics, consumers will benefit from greater supplies of goods and services at lower prices, and employment will increase.

The problem isn't that the concept is wrong - it is how you go about it.

What we've learned is the system when performed at an absolute level is not equal at all levels and that is the problem with taxation theory.

The idea is that you cut taxes for the rich - that is postulated by the left - which isn't totally true in practice. The problem here is special interest/lobbyists have effectively created loopholes where the rich are able to take advantage of tax exemptions that allow them to pay a lower marginal tax than those who are absolutely less wealthy and more poor in income than those who are wealthy and also of high income.

The other issue the concept of the floor.

The floor is the point where you have to earn enough money to pay taxes. When the rich or conservatives want to broaden the base in tax theory - is to get to more of a 'flat tax' where everyone pays the same marginal tax. This is of course impossible for those who literally don't earn enough to house themselves or even have regular meals - mostly this is limited to places like California in LA/Bay area and Washington in the Seattle metro as well as NYC in New York. A few other cities have similar issues but not nearly as great of a problem of mass homelessness and destitute poverty in regard to regional necessary income to meet a basic wage to live.

One can argue personal responsibility to a degree and choice as to the means of living - though if the most common or Median income in an area is sub-optimal or even below that to subsist you have a problem economically and a problem politically. Heck even the French Revolution period of time often had more equalized living and wealth distribution than we do now; however, we also have technology and comforts and cares that meet most of our needs. It is this advancement in technology that has prevented revolutionary actions despite the inequality of wealth levels. With that in mind if you want supply side economic theories practiced you really have to reduce regulations significantly for all parties and we've never actually done that.

[isingmodel]

The problem isn't that the concept is wrong - it is how you go about it.

What we've learned is the system when performed at an absolute level is not equal at all levels and that is the problem with taxation theory.

The idea is that you cut taxes for the rich - that is postulated by the left - which isn't totally true in practice. The problem here is special interest/lobbyists have effectively created loopholes where the rich are able to take advantage of tax exemptions that allow them to pay a lower marginal tax than those who are absolutely less wealthy and more poor in income than those who are wealthy and also of high income.

We have slashed taxes on the rich, though.

https://fas.org/sgp/crs/misc/R42729.pdf

The average tax rate for the top 0.01% (one taxpayer in 10,000) was about 60% in 1945 and fell to 24.2% by 1990. The average tax rate for the top 0.1% (one taxpayer in 1,000) was 55% in 1945 and also fell to 24.2% by 1990, following a similar downward path as the tax rate for the top 0.01%.

This is average (effective) tax rate. It's been cut by well over half since the 40s in the US.

There's much more to this than tax, and other problems like automation and globalisation that are harming the average worker. But putting aside lobbying and loopholes, the baseline tax required of the highest earners has plummeted - and no it has never boosted economic growth or income for the average pleb.

[tk217]

We have slashed taxes on the rich, though.

https://fas.org/sgp/crs/misc/R42729.pdf



This is average (effective) tax rate. It's been cut by well over half since the 40s in the US.

There's much more to this than tax, and other problems like automation and globalisation that are harming the average worker. But putting aside lobbying and tax loopholes, the actual tax required of the highest earners has plummeted.

It doesn't matter what the rate it is - it matters what you actually pay as a marginal rate.

https://www.fool.com/taxes/2020/09/2...ay-a-lower-ta/

[Weightaholic]

Dribble down economics works wonders!

[Skwidward]

I always thought a flat tax was a sales tax only thing... like no income tax.

Stuff would be more expensive, but you wouldn’t have that state/federal bite taken out of your income

Always seemed like a good idea to me, but I never ran any numbers (not that I’d know where to start)

[memcop]

Sure. Small business core is even better. Who's fairing the best/worst in Covid-19 era?

[Abzu]

Let's say America is worth $100T and China is worth $100T.

If America transfers $50T to China then there will only be $50T left in American wealth.

Does the average American have more or less access to capital and financial mobility?

[SimpIeJack]

Yes, it works at its intended purpose: Siphoning wealth from the lower and middle classes while creating a new American oligarchy.

[Phil9]

Yes, it works at its intended purpose: Siphoning wealth from the lower and middle classes while creating a new American oligarchy.

Correct. It’s actual purpose is to make rich individuals richer. The “trickle down” nonsense was just how it was advertised.

[FChumChum]

By the way, i’ll mention one other data point.

For most companies, they are trading on GROWTH and EBITDA (Earnings BEFORE Interest taxes, depreciation, amort). So 95% of a companies are focused on maximizing sales and revenue — so if a project is accretive to sales or EBITDA, it’s usually a good investment.

Taxes of course factor into the equation since it affects cash flow, but generally if a project or investment can affect revenue growth or EBITDA margins / growth, then it’s worthwhile for a company to pursue.

I’ve been in the room / on the phone of companies thinking through these decisions and of course tax matters, but tax rate is never the reason a company won’t pursue a given path (maybe it pushes them across the line) but most companies don’t actually care whether tax rate is 20% vs 25% vs 30%.

This is from a corporate view. I mentioned my thoughts from an individual perspective.

[FChumChum]

Let's say America is worth $100T and China is worth $100T.

If America transfers $50T to China then there will only be $50T left in American wealth.

Does the average American have more or less access to capital and financial mobility?

This isn’t how economics works.

As said in original OP, if your networth is <750k or income less than 200k, gtfo.

[Abzu]

This isn’t how economics works.

As said in original OP, if your networth is <750k or income less than 200k, gtfo.

The more wealth in a country the more resources there are to fight for.

If there are 300 people but 600 glasses of water available then you have a better chance of getting a drink than if there were 150 available glasses. Of course, whether there is 300 glasses or 600 glasses there is still a possibility you earn no water. Money is better served in the hands of the people than in the hands of government.

I have no interest in proving my worth to you.

[sawoobley]

Trickle down economics does not exist. It is a strawman smear of supply side economics.

If there is ever a contest for the s told in politics, most have some little tiny fraction of truth in them, to make them seem plausible.

But the "trickle-down" lie is 100 percent lie. It should win the contest both because of its purity — no contaminating speck of truth — and because of how many people have repeated it over the years, without any evidence being asked for or given.

Years ago, this column challenged anybody to quote any economist outside of an insane asylum who had ever advocated this "trickle-down" theory. Some readers said that somebody said that somebody else had advocated a "trickle-down" policy. But they could never name that somebody else and quote them.—Thomas Sowell, “The Trickle Down Lie.”

[MMeadows11]

It works as well as reducing the deficit/debt through tax cuts (which invariably go to the rich.)

None of that chit works, but Republicans trot it out every 12-20 years or so, and blow up the debt some more. Then they're like "Hurr de durr de durr - we thought that giving ourselves a tax cut would also reduce the deficit. Ooops!!"

Then after the Republicans trot that bullchit out, modest-incomed Republican voters allow themselves to get conned, many even thinking they are participating in the tax scam/cut, so they vote for these con artists.

Repeat cycle 12-20 years later. (See : Reagan, Bush 2, Trump)




It's a really weird thing that should be obvious by now.

[Latinowarrior3]

We've done it in America since Reagan. It obviously doesn't work. Only a shill or retard would say it does.

[FChumChum]

The more wealth in a country the more resources there are to fight for.

If there are 300 people but 600 glasses of water available then you have a better chance of getting a drink than if there were 150 available glasses. Of course, whether there is 300 glasses or 600 glasses there is still a possibility you earn no water. Money is better served in the hands of the people than in the hands of government.

I have no interest in proving my worth to you.

I don’t understand your analogy, but that’s not how money works.

You dont need to prove your worth to me. I can tell by your posts that you dont know anything.

[Abzu]

I don’t understand your analogy, but that’s not how money works.

You dont need to prove your worth to me. I can tell by your posts that you dont know anything.

By your own admission you have a hard time understanding simple arguments.

You attack my knowledge and my worth.

Your purpose is obvious.



The title of the thread should be, "Is money better served in the hand of government or citizen?"

[FChumChum]

By your own admission you have a hard time understanding simple arguments.

You attack my knowledge and my worth.

Your purpose is obvious.

Money and resources are not a closed loop system. Your analogy makes no sense.

[Abzu]

Money and resources are not a closed loop system. Your analogy makes no sense.

The OP doesn't make any sense.

These people are getting rich by saving the money they have - not all of a sudden spending like an idiot now that they have more $$ in their pocket.

Rich people do not make money by holding, they make money by investing.

The more money there is to invest the better it is for all Americans.

If the rich feel squeezed then they will be more likely to hold.

[FChumChum]

The OP doesn't make any sense.



Rich people do not make money by holding, they make money by investing.

The more money there is to invest the better it is for all Americans.

If the rich feel squeezed then they will be more likely to hold.

You dont understand economics, get the fuk out of here (srs).

What does rich people holding amazon have to do w economic output?

[MMeadows11]

We've done it in America since Reagan. It obviously doesn't work. Only a shill or retard would say it does.

Or a poor Trump cultist, smiling and derping while Drumpfh and the Trumppublicans jack up the deficit to give themselves huge tax cuts.

Funny how so many people (cultists) can't even recognize reality as it's phkng happening....

[tk217]

By the way, i’ll mention one other data point.

For most companies, they are trading on GROWTH and EBITDA (Earnings BEFORE Interest taxes, depreciation, amort). So 95% of a companies are focused on maximizing sales and revenue — so if a project is accretive to sales or EBITDA, it’s usually a good investment.

Taxes of course factor into the equation since it affects cash flow, but generally if a project or investment can affect revenue growth or EBITDA margins / growth, then it’s worthwhile for a company to pursue.

I’ve been in the room / on the phone of companies thinking through these decisions and of course tax matters, but tax rate is never the reason a company won’t pursue a given path (maybe it pushes them across the line) but most companies don’t actually care whether tax rate is 20% vs 25% vs 30%.

This is from a corporate view. I mentioned my thoughts from an individual perspective.

There are different reasons to invest in companies - and it isn't always EBITDA. Dividend yield and potential are also strong drivers of potential earnings and thus stock price. See Tesla versus AT&T. Completely different companies with different aspects of potential growth opportunity as to a reason to buy these stocks.

Tesla is almost entirely driven by madness in regard to the fervor of the environmentalist white-collar yuppie and the potential of 'great things' or advancement to automotive/connectivity/access. It offers no dividend but seems to have exceptional growth (though the train has gone by on this one if you want to be a millionaire in a few weeks) it is improbable it will continue the historical trending of massive percentage year over year growth.

AT&T is a generic firm with high debt but currently deleveraging and offsetting 'poor performing assets' that offers a substantial yield in comparison to the rest of the market with a very cheap stock price. Based on management actions it looks to be trying to relieve inopportune liabilities which is a good idea to get better ratios and reduce cash flow potential issues. The reason to invest here isn't because AT&T is a great potential or even "ok" management as I would classify AT&T in the "average" level of groupings as far potential but because it is more akin to a Monopoly in regard to telecommunications and it has a substantial cash dividend.

Most companies do not care about tax rates you are correct - as they will push them onto the consumer with higher pricing generally. That is not always the case but generally it is - companies with R&D will just offset their potential taxable liability through these mechanisms which may or may not be honest accounting.

You could look at AECOM an design firm that has been selling off their construction line - but I believe they paid zero taxes in 2019 because of all the offsets they could use.

[Abzu]

You dont understand economics, get the fuk out of here (srs).

What does rich people holding amazon have to do w economic output?

Buying Amazon stock is an investment that helps all Americans also invested in the market, this is different than holding cash in the bank.

Attacking me does not increase your stature.

I hope you find security in yourself.

[tk217]

You dont understand economics, get the fuk out of here (srs).

What does rich people holding amazon have to do w economic output?

It depends - but if rich people feel like they are in a good place - they'll blow their load on consumables more readily.

Albeit some rich people are just as frugal as they ever were and that is a potential issue.

When rich people become tight-fisted it hurts a consumer economy. You want rich people to invest or spend their monies as fast as possible and technically to keep the great wheel turning you want zero saving or zero stalling of funds in any particular account. That is how 'good economies maintain' if someone corners a market or there is a huge 'off switch' pushed in a sector you end up with recessions and depressions. It is a bit weird but economic climates are almost akin to demonetization or monetization algorithms on various websites.

[FChumChum]

Buying Amazon stock is an investment that helps all Americans also invested in the market, this is different than holding cash in the bank.

Attacking me does not increase your stature.

I hope you find security in yourself.

I find security in knowing I have some knowledge of what I’m talking about.

[FChumChum]

There are different reasons to invest in companies - and it isn't always EBITDA. Dividend yield and potential are also strong drivers of potential earnings and thus stock price. See Tesla versus AT&T. Completely different companies with different aspects of potential growth opportunity as to a reason to buy these stocks.

Tesla is almost entirely driven by madness in regard to the fervor of the environmentalist white-collar yuppie and the potential of 'great things' or advancement to automotive/connectivity/access. It offers no dividend but seems to have exceptional growth (though the train has gone by on this one if you want to be a millionaire in a few weeks) it is improbable it will continue the historical trending of massive percentage year over year growth.

AT&T is a generic firm with high debt but currently deleveraging and offsetting 'poor performing assets' that offers a substantial yield in comparison to the rest of the market with a very cheap stock price. Based on management actions it looks to be trying to relieve inopportune liabilities which is a good idea to get better ratios and reduce cash flow potential issues. The reason to invest here isn't because AT&T is a great potential or even "ok" management as I would classify AT&T in the "average" level of groupings as far potential but because it is more akin to a Monopoly in regard to telecommunications and it has a substantial cash dividend.

Most companies do not care about tax rates you are correct - as they will push them onto the consumer with higher pricing generally. That is not always the case but generally it is - companies with R&D will just offset their potential taxable liability through these mechanisms which may or may not be honest accounting.

You could look at AECOM an design firm that has been selling off their construction line - but I believe they paid zero taxes in 2019 because of all the offsets they could use.

This guy gets it.

Yes, there is dividend yield and P/E investing.

But at the end of the day, taxes probably help small business, but for most of big business, as we’ve seen after the trump tax cuts, the tax cuts went to share repurchases vs. New capex investment, etc.

[tk217]

This guy gets it.

Yes, there is dividend yield and P/E investing.

But at the end of the day, taxes probably help small business, but for most of big business, as we’ve seen after the trump tax cuts, the tax cuts went to share repurchases vs. New capex investment, etc.

Which as an investor I enjoy 'share repurchase' in regard to those firms that will not spend the money effectively or cannot. I will ultimately get a better RoI because they're maintaining their potential backlog/revenue while either deleverage debt or decreasing asset against equity and if the ratio is good it will result in a more valuable stock price for me.

Some people bemoan repurchases as they believe the firm should use 'cash on hand' to invest in either the employee or the product they sell. That isn't always the case as investment in 'humans' is often wasted by corporations i.e. they blow it on snacks in the office. If they're not mechanized meaning they do not manufacture something or they are more thoughtful or softskilled you don't get much growth from these kinds of investment methods. Sorry. Those are the facts. If you are mechanized you should be trying to cut the price of your product or improve upon it the entire time. Doing that will result in a highly competitive item in the marketplace and generally if you can compete here and produce here you will undercut your competition and thus grow stock price. Tesla decimates the EV sector and will continue to - other car companies are a bad investment in the next 15 years based on what I have seen. I actually expect Ford to go bankrupt and vanish with Fiat.

[FChumChum]

Which as an investor I enjoy 'share repurchase' in regard to those firms that will not spend the money effectively or cannot. I will ultimately get a better RoI because they're maintaining their potential backlog/revenue while either deleverage debt or decreasing asset against equity and if the ratio is good it will result in a more valuable stock price for me.

Some people bemoan repurchases as they believe the firm should use 'cash on hand' to invest in either the employee or the product they sell. That isn't always the case as investment in 'humans' is often wasted by corporations i.e. they blow it on snacks in the office. If they're not mechanized meaning they do not manufacture something or they are more thoughtful or softskilled you don't get much growth from these kinds of investment methods. Sorry. Those are the facts. If you are mechanized you should be trying to cut the price of your product or improve upon it the entire time. Doing that will result in a highly competitive item in the marketplace and generally if you can compete here and produce here you will undercut your competition and thus grow stock price. Tesla decimates the EV sector and will continue to - other car companies are a bad investment in the next 15 years based on what I have seen. I actually expect Ford to go bankrupt and vanish with Fiat.

Well the main thing repo’s show is that capital allocation decisions are based upon the opportunity set / potential returns vs. tax rate. So it’s a myth that because corporations are flooded with cash they’ll reinvest it or hire more ppl, etc, etc.

Instead they repurchase stock because they dont have any better opportunities for investment - instead they want to return cash to shareholders.

Saying humans will just eat snacks is kind of funny. But at the end of the day it’s skill an innovation that drivers technological advancement.

Not for this discussion, but that gets you to immigration policy, etc. and why a nationalist policy may not be the best thing for the country (but like automation, will have severe consequences to those uneducated / left behind).