Whoa, Contra said yes? That almost proves the point. However, tax cuts and regulation cuts obviously works. If you deny that, you are an idiot. Here is why: comparative advantage. Companies don't built here because its too expensive, and its annoying when Obama says you cant build in right to work states (lol). So making it cheaper encourages people to come to this country and discourages outsourcing. And the tax cut does not have to be huge. A 10% tax cut for a millionaire is equivalent to a 20% tax cut for someone making 100,000 dollars. Lets give historical examples. 1920's. taxes went from 73% to 25%, economy expanded 59%. No surprise, I would rather hire people if I had more money in my pocket too. A flat tax raises taxes on the poor and lowers them for the rich--Harvard economists predict that would create 5 trillion dollars (that means our economy would grow by 1/3!). Also, it makes sense, would I rather work when hard when half of it is washed down the toilet, or when 10% of it is taken? Would I work harder if my secretary gets a tax cut but me--the only reason she is in the workforce--gets a tax hike? Higher taxes discourages innovation, expansion, and economic growth. Its Econ-101. Lower taxes would increase our comparative advantage and not "reward" outsources, it merely gives them a reason to return. And that's a fact (raising taxes on them makes them want to come back why?)
Lower tax rates increase available income for families, spurring demand. This in turn results in increased business growth, which both together create a strong economy.
Businesses engage in capital accumulation and reinvest in their own facilities to gain higher future profits, and this leads to human progress and higher standards of living.
Here is a good example: Apple. Apple uses some of its profits to reinvest them into creating new factories, and engaging in more research and development for future Apple products, so Apple stays competitive in the future. As a result of these actions, demand for workers increases, innovation requires high skilled workers, and in return these actions improve employment levels and higher wages. High taxation discourages this expansion, and leaves less money to do so.
While it's valid to argue the scope of supply-side economics, it is not legitimate to argue its existence.
The primary fallacy voiced on the 'No' side is that the wealthiest will "hoard" their money instead of spending it. The implication, I suppose, being that they're literally stuffing their mattresses with bundles of cash. Of course, this is ludicrous. Money saved is money reinvested. Money reinvested enters the supply of funds available for the range of business investment and projects. It lowers the cost of funding these projects, and in aggregate, increase the total volume of projects attempted. And of course, the lower rates lower the threshold for attempted projects--lower tax rates permit lower net presently valued projects to become that much more attractive. I.e. no point in risking for minimal return.
Or, look at as the flip-side of the Keynesian coin: business with X% cost of capital and Y demand vs. Y% cost of capital and X demand.
Job creation occurs where markets allocate capital, not where we decide 'another 10 million mechanic jobs sound great!'.
Also, supply-side economics have absolutely nothing to do with the wars in Afghanistan and Iraq.
The fact is simple: increased taxes take money out of Americans' pockets. Some will say "well yes, but these are the richest people and they can afford it". These people fail to understand what drives our economy. Do you really think it's the day-laborer on the street? No -- it's the rich that foster innovation, accumulate wealth, and create employment for millions of Americans. This is a core part of the American Dream: the ability to build something from the ground up, own it, and do whatever you please with it. If you take this away from people, they will no longer have incentives to create businesses; if you are taxed 75% on your income like the rich in France, you will simply move away, as the most rich man in France did right after the implemented this tax. And even if they taxed all the money of all the rich people in the US, the government would still want more (during the Great Depression, for example, the government placed a 100.6% income tax on those with the highest earnings. This did little to no good... Consequently business started to pick up again when they were dropped). Place more restrictions on businesses, and they simply will not be able to afford it, begin outsourcing jobs to China, and leave Americans with no jobs. But allow the rich to keep their wealth and stir the economy, and you will find that everyone seems to do better. (By the way, the reason the economy was thriving in the 1990s was because Clinton inherited it from Ronald Reagan, supply-side economics and conservative values) :)
Lowering taxes on American companies allows for more jobs to remain here, in America. If you continue to tax the big companies it will only lead to outsourcing and a rise in unemployment. How can you say it doesn't work when initiated in the Reagan administration, Reagan started with a 10.2% unemployment rate when he took office. After his administration, the unemployment rate was at a 50 year low at 4.9%. This is the greatest change in the unemployment rate of any Presidency. How can you not see the damn facts!
Hoarding? How do you hoard anything nowadays? Where does it go? Put it in a bank? Stocks? Real Estate? Vacations? Trinkets? Toys? Boats? Cars? That's not hoarding. Those are all economic activities in industries that employ workers from high level executives to minimum wage janitors? Didn't the money in motion start at the top with the purchase of a good or service and trickle down to all the workers, managers, subcontractors, and ancillary services required and get all the way from these peoples pockets to fund their purchases and buy their lunches, pay their mortgages, and fund their expenses? And then go on to the pockets of those who's goods or services were purchased by that group?
I think I have seen the opposite of hoarding, over extension, to a much higher degree than any other economic activity lately. Living within one's means and saving or investing are responsible activities that needs to be part of everyone's plan regardless of how meager an amount is set aside. As uncertainty and risk is removed from one's future, additional economic activity will occur.
There is a lot of talk about the impact of infrastructure such as pipelines to the economy. From my perspective, these types of projects do have a trickle down effect into the economies where they operate - from the design phase through the construction and ultimately the transportation or end phase. These multi-billion dollar projects must hire people and buy goods and services from both the national and local economies - the pipe, the contractors, the motels, the coffee shops all along the route benefit economically from such projects. Once the pipeline has been built and is transporting oil or natural gas, communities along the route continue to benefit through taxes and payments for right-of-way's etc. All of which are paid for from the tolls charge to transport the petroleum products. While not driven from a reduction in taxes where the tax savings is expected to spur economic activity, these benefits are realized through payments made by the pipeline companies who "tax" the oil producers through tolls to ship their oil - QED :)
This entire premise is a strawman.
However, all else equal, lower marginal tax rates and less regulation would lead to higher average income in most modern economies.
The stagnation of, for instance, France and Italy are evidence of this.
Likewise, the success of countries like Singapore and (prior to 2007) Ireland are also evidence.
The most of wealth of the world is in the top 1%. That's bad. That's because of the current trickle down economics. The rich get richer, and the poor are getting poorer.
Trickle down makes everything harder on the poorer. It doesn't work, and it's been seen many times. People barely ever make their way to the top from poverty.
Well, the first item we need to look at is the fact that Bill Clinton inherited and economy that was already growing (even though the AP made sure not to report it until after the election, in Iowa it was two days afterwards in The Des Moines Register). You cannot point to anything that Clinton did to turn the economy around when it upticked right after the election. Maybe Bloomberg put it best when offering options for Clinton and the economy immediately after the election:
Bloomberg November 1992
SCENARIO 1. Clinton inherits an economy ready to blossom: Inflation has been wrung out, the real estate crisis is over, companies are restructured and ready to compete, and debt is paid down. A surging economy provides no basis for a politics of revenge against the rich. Clinton is forced to become a moderate in order to benefit from the economy.
Under this scenario, the economy itself will bring the Democrats back to Middle America and force them to shed the left-wing infantilism that has banished the party from the White House for 20 of the past 24 years. This would be good for Republicans, too, who would again have to govern well in order to compete for the Presidency.
Just because money is put into a business does not increase its production/jobs/taxes paid of profits. Increasing demand however (by raising the income of the lower and middle class) means there is more money regularly coming into a business through its sales, generating more tax, increasing revenue (and thereby making it affordable to increase production, create new jobs etc).
Honestly, its high-school economics. Supply and demand curves people, learn something.
The trickle down effect does not work due to the fact it makes the rich richer and the poor poorer, it only increases the gap between the two classes. It encourages the rich to be greedy and no one likes a greedy person! To conclude, the trickle down effect does not trickle down because the rich do not involve the poor in the scheme. -Written by Yr 9 School children from Oxford.
It doesn't work. By lower taxes and thereby increasing the wealth of the wealthy, you assume that the wealthy would forgo a want to hoard the wealth and instead spend money stimulating the economy, when in actuality, by means of human nature, the wealthy, in all the glory of human greed, hang onto their wealth. You can't continue to supply something that no one wants to buy, either. With supply-side economics, corporate taxes are lowered to form a greater sum of funds for creating jobs and increasing production, with services and prices then at a significantly lower price, therefore assuming that this would make those products more attainable and thus more people would be buying them. But, if the consumer simply doesn't want or have the ability to purchase these items, making more of them doesn't help. As mentioned, if 100 people want an apple, and then apple production increases to lower the price of apples, there are still only going to be 100 people buying apples. A surplus of goods simply does no good if there is no one around to even want to put their hands on it. This economic plan relies far too much on assumptions to function, and you know, when you assume, it makes an ass out of you and me.
If "trickle-down" works, why has what followed been the highest income inequality and wealth inequality since the Great Depression? In the 1990s, economic growth averaged 3.8% a year--the strongest in 30 years; 23 million jobs were created, unemployment fell to its lowest in 30 years; and record budget deficits turned into record surpluses. And this occurred after tax increases on the wealthy in 1990 and 1993.
What about the 1960s? Economic growth averaged 5.4% a year; unemployment fell to its lowest in modern history; and roughly 12 million jobs were created. And this occurred during a top marginal rate of 70%! Plus, poverty was cut in half and median household income saw its greatest rise in modern history. Where's the proof that "trickle-down" economics work? Exactly. There is no proof.
If demand for products increases then companies will higher more people to produce the products. If you lower taxes and demand does not increase jobs will not be created because they simply are not needed. Think about it, if you owned a company and your taxes are lowered putting more money in your pocket are you going to say wow I now have more money let me go hire someone even though my workers are currently meeting the demand. Companies are in business to make money so if you are meeting demand why would you take on extra expenditures when they are not needed.
Taxes are at their lowest in history. with some corporations paying zero in taxes and some corporations even managing a negative percentages
Worker productivity is at high Demand is high, however cost and lack of available funds prevent buyers from purchasing. I don't see how lowering taxes are going to increase demand for the brackets that actually spend more money
The Industrial Revolution happened b/c of a huge amount of demand for consumer goods. NOT a huge amount of SUPPLY of them. It doesn't matter how many consumer goods are out there, the economy is going to constrict if people aren't BUYING them. It's how the great Depression got started.
Wages were not keeping pace with productivity and demand was not keeping pace with the supply thereof. People were betting that people would keep on buying when in reality, they couldn't.
For example today, even though corporations are enjoying HUGE profit margins, the reason they aren't creating jobs is b/c there's not enough demand for them. Therefore, we need to increase the demand.
What adontimasu said
For trickle-down economics to work, humans would have to be naturally selfless and be willing to spread wealth, instead of hoarding it. Ignoring that this is an obvious human nature flaw, we can see that it isn't working based on the fact that it is being held by the wealthy instead of being spent.
This economic theory holds that the top earners will forgo their desire to remain rich, rather than simply hoard all the capital within an economy. Trickle Down invariably leads to massive movements of money away from productive enterprise - and towards capital gains income.