Do tax cuts for the wealthy really pay for themselves and create prosperity for all?

Question

I've been told that the money the wealthy save will eventually trickle back down to the lower classes and make up for their increased tax burden. Yet, every time this happens, the concentration of wealth becomes more pronounced and corporations move more jobs overseas.

Is this just a temporary phenomenon? In the long run, will money and jobs find their way back to the lower classes? If so, how long will this take?

Answer 1

My feeling is that the trickle down theory works for a closed system/economy, but with globalization, it doesn't apply anymore. I mean, if I had a lot of money, I can go overseas for a holiday and spend money there. How does that benefit the taxpayers here? By the time money that were received by the people overseas gets here (say they come here for vacation), it will be such a small percentage of what was spent that it would be meaningless (assuming that it ever comes back at all).

Personally, I think it's a spin that the politicians put to justify tax cuts. They should not give them the tax cuts, because the national budget is already in so much trouble.

Answer 2

You have a few misnomers in your statement.

One, there's no such thing as tax cuts for the wealthy. We all get the tax cut. And it's not necessarily a cut in the taxes paid, it's a lowering of the percentage you're required to pay. There can be a difference.

Two, lowering the tax rate (at least to a certain level) does not increase the tax burden. Normally, and it was the case when President Bush first lowered our taxes, the lowered rate kicks the economy into high gear and the government actually ends up getting more tax money with the lower rate (i.e. a slightly lower percentage of a much bigger amount). The burden comes in at the spenditure end. In other words, the wealthy (and others) may actually pay more in tax dollars (even though the percentage is lower) because the booming economy allowed them to make more money.

Three, the moving of jobs overseas has nothing to do with lower income tax rates. It has more to do with minimum wage laws, American union restrictions, and the high standard of living in America.

I also don't see the concentration of wealth becoming more pronounced. Overall (there are exceptions to every rule), no segment of America is getting poorer. The way the U.S. defines the line of poverty is very generous, yet only 12% of people in America live below it. Is that unacceptable? Sure. But I wouldn't say the rich are getting richer and everybody else is heading for the poverty line. There is a huge section of America that is middle class. We'll never be rich, and it's unlikely we'll ever be poor. But that's not concentration of wealth. And don't automatically bash the wealthy. People like Bill Gates and Bill Bennett are giving billions of dollars to help improve this country - not only through taxes but also charitable organizations.

The tax rate isn't the problem. Every year, under President Bush's lower taxes, the government has received MORE money. The problem is government waste/inefficiency and government entitlement program fraud. There's plenty of money, we're just wasting a huge amount of it.

Sorry for the long answer.

Answer 3

Tax cuts for the wealthy are just that. To keep them wealthy. Trickle down economics is a farce in this society and present administration. The latest deal Bush put out actually increased taxes for people whose income is less than $150,000, and that's most of us. Corporate America pays no taxes nor do their owners. If these taxes were paid there would be no deficit. Another item of interest that pertains to this with oil prices the way they are who is making the most the Oil Companies, negative the US Government there are umpteen hidden taxes on all fuel and oil products they have reaped the riches of Averis on this bogus inflation of crude oil.

Answer 4

Who do you imagine will pay the higher taxes? the consumers, a.ok.a. the middle classification takes position to be the biggest team of folk who consumes. This Senate (Democrat managed) exceeded a bill, giving the states permission to collect taxes. What company is it of the federal authorities, no matter if the states assemble taxes? in my opinion, i imagine it is a back door attitude to allow the federal authorities to collect taxes on on line sales contained in the destiny. is this yet another damaged promise by President Obama, now to not strengthen taxes on the middle classification? No that is a states sales tax advance, that the Obama administration has inspired threatened the governors into accepting.

Answer 5

Tax cuts for the wealthy do trickle down to the lower classes, but not nearly as significantly as those who believe in them would have you think. It failed during the 80s, it's failing now, and ultimately this nation is on its way to a class system reminiscent of Medieveal Europe.

Answer 6

The economic term for this is "Reaganomics" after former USA president Ronald Regan.

According to the Bureau of Economic Analysis , real economic growth averaged 3.6 % during the Reagan years versus 2.8 % during the Ford-Carter years and 3.1 % during the Bush-Clinton years.

"Reagan's supply-side model changed the paradigm of government involvement in the economy. Keynesian economists were at a loss to explain why the aggregate demand increases of the 1970's did not result in improved national economic performance. Likewise, they could not explain how to reverse the shift in the Phillips curve. The Reagan-Laffer-Volcker-Milton Friedman model of improving economic performance by reducing government involvement in the economy has since gained wide currency. President Clinton ran as a "New Democrat": fiscally conservative and trade-friendly. Estonia, Latvia, Slovakia, Serbia, Romania, Georgia, Ukraine, as well as Russia and Iraq have variations of the flat tax. Governor Bill Richardson of New Mexico cut personal income taxes in 2003 "to spur growth and investment"."

Answer 7

Whether or not you believe lowering taxes is a good idea, the logic seems clear: Cutting taxes accepts the certainty of a bigger budget deficit today in exchange for a less certain boost to economic growth in the future.

Answer 8

Absolutely YES!!! It will take about 3 weeks and by the way, Sandsquish, there really is a Santy Claus!!!