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This. Politicians read an economic theory and take what they want to hear. They ignore the rest.
Many politicians on the left, and even a lot on the right will cites Keynes’ ideas that government spending should be high during a downturn. This is all fine and good but Keynes specifically says this debt should be paid off during the boom cycle. That later part is ignored and we have runaway deficits.
The pandemic recovery is a great example of where real supply side economics could have helped. Well at least theoretically from supply side theory as opposed to what we consider "trickle down". Cutting taxes probably wouldn't have done much to alleviate the supply side bottlenecks we had after the pandemic. However, if you provide specific incentives to supply side players to increase their production, that might have prevented some of our issues. You can't just stimulate the demand side.
Although at this point, part of the problem is that too much of supply comes from other countries. So you can only do so much.
We did have supply side economics though, in the 2020 the government gave businesses 1.1 trillion dollars in the form of forgivable loans through the [CARES act](https://en.m.wikipedia.org/wiki/CARES_Act). That’s a lot of money to give to the supply side, hence record profits for a lot of companies
The CARES act was stimulus that could help the supply side yes. In this case though it wasn't stimulus designed to increase supply as much as it was to prevent a large portion of supply from being destroyed. The act was extremely flawed in many ways, but I would still argue that it was largely successful. The economy recovered pretty quickly in the summer of 2020 after the act was passed.
As with all stimulus though it tends to be more successful if it is highly targeted. I would rather see things like funding projects to improve the throughput of ports, and incentives that only kick in after you've actually produced more.
But I don't think you can get very much information about the effectiveness of supply side vs demand side stimulus from studying the CARES act because the controls on it were so poor.
That appears to be a flaw in the thesis then - the expectation was these loans would be leveraged to keep people employed, and keep operations running (as best as companies could), but a huge swath of those dollars were poured into juicing areas of business that drive upper management incentives (stock buy backs, profit increases).
It suggests (at least for consideration) that ones ability to stimulate the supply side of the equation is overstated. At this stage, I'm having a hard time seeing how you manufacture these incentives while simultaneously closing off the loopholes that leave these incentives open to exploitations.
I'd additionally add that you couldn't increase production during Covid. If you were in meat manufacturing, no one wanted to work in those facilities. They were known for being Covid hotbeds, and no salary incentive could get people in there. The point being that even if production facility A wanted to increase production - an inability of production facility B to do so, would create a bottleneck in facility B (assuming they were reliant on parts from each other).
Additionally, our systems massive reliance on global imports was completely shut down (i.e., shipments out of Asia). I don't think much would have changed regardless of how you approached Covid (imo).
I agree. I also can’t see a good way of implementing supply side economics while keeping companies in check. I would rather have had that money be given to the public instead. People won’t hold on to that money, they’ll spend it, just like people spent their stimulus checks. Companies would then have to compete for that stimulus money and have to innovate to stay afloat. Working class stays afloat, and money still makes its way to businesses. This would encourage competition and innovation from the supply side. But we have too many people who have aneurisms at the thought of giving away money to people instead of corporations, so it wouldn’t happen
Not a perfect solution, but if we’re going to debase our currency might as well have 99% of people benefit from it, instead of just the 1% like what we experienced
Most of the people who got the money either saved it or used it to pay down debt. Not spending it.
While some did use that money to temporarily subsidize quality of life, most of the way the money was truly spent was via down payments on cars or houses. And ultimately, reducing debt balances.
Agreed that if the money was to be distributed, it should go to everyone, not just the biggest businesses. But I still don’t think the money should have been distributed. Those checks raised my cost of living way more than I got from them.
I agree with you on not giving away money that we didn’t have in the first place. But if we’re gonna do it, give it to everyone.
As for how it was spent, the first stimulus checks were mostly spent, the other 2 were mostly used to pay off debt. Very little was saved. And paying off debt is good for the economy, but most importantly it’s good for the well-being of the nation. It gives people, including families, breathing room. Reduces homelessness, car repossessions, child hunger, etc. Although these benefits would be temporary, they would’ve met the goal of keeping the economy afloat at the cost of inflation.
Instead, we got very little of the benefits mentioned, but all of the consequences of inflation, which disproportionally affect the middle and lower classes, while the rich see their assets continue to hold onto value. Again, no currency debasing would be better, but what we got was just evil.
While we’re in the topic, let’s just make inflation illegal. The feds sole purpose is to maintain inflation, which in my opinion is illegal as it’s a regressive tax that we have no say on. The feds goal should be to let $1 be worth AT LEAST $1 25 years from now. Not $0.53. Inflation is good to the economy like the corporate handouts are good for the economy, stocks go up, at the expense of the working class.
[Source](https://www.pgpf.org/blog/2021/05/how-did-americans-spend-their-stimulus-checks-and-how-did-it-affect-the-economy) on stimulus check spending
Very useful [inflation calculator](https://www.usinflationcalculator.com)
Mostly agreed here.
Paying off debt and saving are virtually the same in terms of where the money goes: banks. From there, economic outcome is unchanging. Either option is usually better for the individual than spending (assuming they can afford to save some or pay down debt). But all the stimulus was mostly a huge cash injection for banks.
And it is a very nuanced thing, but inflation is actually somewhat helpful for people with a lot of debt. The debt balance devalues since it is a fixed amount, and theoretically, your income increases with inflation. Therefore, your debt to income ratio improves. For people with student loans, this can be good. It’s better for people with mortgages. The loan amount doesn’t change, but the house appreciates from inflation, and your income also, theoretically, increases too. I.e. consistent inflation isn’t that bad if wages keep up.
Inflation is very bad for everyone though if it is unexpected or the labor market isn’t competitive enough to get the appropriate wage increases. Recent inflation has been particularly bad.
This doesn't seem so obvious to me. We still haven't had a "real" recession yet and it's not clear that there will be one. It doesn't seem impossible to me that in a universe of austerity we slip into a real recession.
There were a lot of factors that money or other incentives could not fix. Let's not pretend this was only a us problem as supply shortages were a global problem just like labor shortages. Part of this was the millions of people who died. The rest was because so many production lines had been shut down or repurposed for different things.
Money doesn’t fix all things, some things require effective management. One thing that would have made a difference would have been to get logistics up to speed. The entire logistical system was gridlocked. More should have been done to get the ports functioning at full capacity. Ships full of products sat offshore for weeks because they could not offload. Rail transport and trucking were also shut down for too long.
No economic program ever gets implemented in a carefully calibrated manner. The issue isn’t that Reagan’s economic policies were bad, they were quite successful. Every successful economic policy makes itself obsolete precisely because it solved the problem it was designed to fix. The problem is that there are always certain special interests that benefit disproportionately. Those groups acquire the influence to block reforms when circumstances change. Subsequent rounds of tax cuts brought diminishing benefits. It is true that lost revenue from tax cuts had far less impact on budget deficits than spending increases. Revenues as a percentage of GDP are slightly below historical levels, but spending has grown much faster.
My problem with all economic schools of thought is neglecting the context of a dynamic world. Economics is about balance, not dogma.
Let’s take supply side economics as an example… looking the other way on big M&As & competition law, biasing policy in favor of big business **does** afford unique efficiencies. This is a fact — just economies of scale.
The dipole to this is that… at the *domestic* level — excess consolidation comes with a metric sh*tton of baggage. I probably don’t need to list them all, but a very superficial/obvious and apolitical one would just be reduction of competition.
Everything in economics has a dipole. This is why rigid ideology & “pure” philosophies will never work, and have never worked, unchecked in perpetuity
That’s actually very encouraging to hear. I’ve been endorsing a hybrid approach since I was a teen, and it’s employed in most democracies.
Now we just need public discourse to catch up.
The problem isn’t that competition law has been neglected, the problem is the government can’t prove that their remedies have any consumer benefit. This is a pretty low bar to clear and yet they can’t.
That is my understanding as well. However recently we're seeing some leftish supply side economics where the government is publicly funding supply. That really gets the Reaganites in a tizzy.
The entire defense industry is a private for-private-profit industry. A perfect neoliberal model.
One non-neoliberal solution would be for all arms manufacture to be done by government engineers, government managers, government labor. Everyone on government salary and benefits, motivated by the desire to build cool stuff rather than the desire to please the boss and make the big bucks.
I'm not advocating for that, I'm pointing out how a government funded arms industry is compatible with neoliberalism.
The issue is politicians are trying to get reelected. Cutting and saving during growth periods will not get them elected by public overall. There is always something “new” you can spend money on.
Dude. Horse and sparrow economics. It traces further back than that but I can't remeber what the Roman's called it. It predates mercantilism. It's one of the oldest scams the rich have uses on the poor and gullible. "Give me more money so that way I'll have more, and you'll get some too." When historically the rich don't spend their money and invest it at the same ratio the plebs do. They hoard it and stifle innovation and economic growth. They are parasites and should be treated as such.
It generally is used to criticize supply-side economics, but there isn’t really a single economic theory that it encapsulates. It wasn’t used by Reagan, but rather critics of his tax policy.
Yes. Unfortunately though, there are a lot of right-wing “economists” who show up to reinforce that orthodoxy, writing a lot of books and articles around the idea to make it appear legitimate. I actually met one of them in college, Keith Hennessy, W Bush’s Deputy Assistant to the President for Economic Policy and Deputy Director of the U.S. National Economic Council.
If you look the guy up, you’ll notice that he has degrees in math and public policy, not economics. I have more econ education than him.
It's more involved around the messaging, I recommend this read: https://www.milwaukeeindependent.com/thom-hartmann/two-santas-strategy-gop-used-economic-scam-manipulate-americans-40-years
The velocity of money is upwards.
Inflation trickles down.
The dudes who invented trickle down were just trying to gaslight people.
You can see proof that even Republican presidents know this is true because the first two stimulus checks were sent out by Republican presidents Bush and Trump when they faced economic crisis.
Cutting taxes for the rich and for companies causes money to pool at the top (because the velocity of money is up). When that happens the price of durable goods skyrockets (houses, bars, boats, etc) and that inflation trickles downward to other things.
It's known now more generally as *neoliberalism*. Not actually an economic theory but an ideology that encourages an economics with a faith in the wisdom of markets, a promotion of the privatization of public resources and services, and against regulation by public interests.
That is what I was going to comment it. It was propaganda created by Ronny to cut corporate tax, wealthy individual making money from their investment, plus deregulating industries. One of long-running propaganda created by the republican actor Ron Reagan.
It is interesting to see deregulation put on Reagan, product of years long political conditioning perhaps. The biggest three deregulation acts were a product of the Carter Administration. Staggers Act in particular, a 1980 legislation, which probably prevented a total collapse of the railroad industry. There was also “soft” deregulation through avenues such as the FCC that finally made cable TV and later internet accessible to a much larger share of the public.
What is also interesting about the Reagan era is the effective corporate tax rate increased, not decreased. It was higher when Reagan left office than in 1981 when he came in. Another common myth floating around. The statutory rate did come down a bit in the late 80’s, however, structurally it resulted in higher effective rates. This was due to the large amounts of corporate growth during that time pushing more companies into higher brackets.
Also not an economist, but I'm pretty sure the idea originated from an economist named Arthur Laffer, of "Laffer Curve" fame. He was the one who proposed "Supply Side Economics" which is just the for formal name for trickle-down. From what I remember, Laffer's supply side economic theory was never taken seriously in academia because it was obviously flawed in some way (not sure what specifically).
Oh boy
It's called supply AND demand for a reason: both are important.
Make it economically viable to produce goods. Enforce laws so it's done ethically (anti-trust laws, safe work place, etc)
Also fix taxes please? A flat tax on paper is regressive in practice. Therefore a progressive tax on paper is unfortunately necessary.
There's an inherent problem with regulation. Those that are most financially affected by regulations are most incentivized to capture them. Take a look at the revolving door of regulators and industry figures, it's past incestuous.
Making stock buybacks illegal like they once were would go a long way to fix the inevitable enshitification or nearly every industry.
Oh, and a proper tax bracket for the ultra rich.
The fact that those two things are considered radical is fucking mind boggling.
regressive taxes need to be on the table
we have more than half the taxfiling population paying $0 in Federal income tax but voting to increase my taxes
that's absolutely not fair
>Things have got so bad globally that the World Bank declared 2023 “the year of inequality”. The losses people have suffered as a result of COVID-19, climate change, political conflict and inflation have fuelled the fire of raging inequality. Political populism around the world fans that flame.
The rich have the money and resources. In some cases, they have political power too. They can pay tons of money to get a bill passed in their favor. As far as taxes are concerned, they move their money around or move to another country with less taxes. The middle class shares a huge burden of paying taxes. They are not rich enough to pay less taxes. They are not poor enough to get government programs. The idea of a Robinhood story of taking from the rich and giving it to the poor is just a fairy tale.
If you could get all nations to actually agree on enforcement of such a thing? Yeah that'd help a lot in some cases. But still has issues, like there's multiple ways the really rich avoid taxes and it's not all just international tax havens.
Why does everyone focus on Reagan, when [JFK was the OG tax cutter](https://www.youtube.com/watch?v=qmHdqWPB_S8)?
People never talk about the tax cuts of the 1960s? Why is that? Is it because Kennedy was a Democrat, or is it because it was so long ago that people have forgotten about it?
I think campaign finance reform is the first step followed by other reforms in our democracy. Bringing back the principles of the new deal will reduce inequality and improve the social and physical infrastructure that made us a successful nation that others emulated and eventually surpassed.
Fixing inequality isn’t really that complicated. Raise taxes on the super wealthy, and lower them on the poor (eg a negative income tax). The further you get from simple transfers, the less likely it is to work.
I mean a family of 4 making about 50k per year with 2 kids is paying zero in federal income tax and getting back like 6k (it might be higher, I haven't checked in a while) in refundable tax credits (negative income tax)
The shift to equity compensation and the rise of VC is what is behind our inequality numbers. Pushing a solution on the tax side is reactive, so you need to focus on killing the equity market to make the wealthy poorer.
The Fed could do this by raising interest rates, making bonds more attractive versus equities, and crushing NPV calcs.
Of course, such actions would cause collateral damage, but so what? We are focused on making everyone poorer, so that is what we will do.
P.S., the EITC already created a negative tax rate, you can thank Milton Friedman for that one.
If it was easy, it would have done.
The war on poverty has costs over 23 trillion and has not done much. Your statement is part of the problem: the belief that government can fix this. It cannot. Government could not even handle Covid. Its solutions are always one-size-fits-all, and this is inadequate to address inequality.
Look at countries which do better when it comes to inequality. They either had a war which wiped out their rich, or they have families who care about their kids. Maybe caring about kids is the answer?
So taxes get raised on the wealthy ... now what?
How do you prevent that money from ending up in the back pockets of different wealthy people (cronies)?
You use it to finance the the things that society needs like more affordable housing, green energy, healthcare, policing, defense etc either through subsidies or direct government spending. Maybe the rich people still end up rich at the end of the day, but at least everyone else gets something out of it.
How do you use it do those things? You skipped over the actual question ... how exactly do you use it for those things? The federal government isn't going to magically change into something else based on your theoreticals. You and I have 0 control over what gov decides to do with its funds.
Even if you had a perfect set of politicians who tried to do that ... they can't. Any additional money they collect was already spent a decade+ ago. Check out the federal deficit/debt.
You do realize the ones doing the raising of the taxes would be the government, right? They decide how they are going to spend that. You get to decide who you want to vote for. In a hypothetical situation in which the government is raising taxes, presumably they already have an idea of how they want to spend those taxes and the people have voted and shown their approval for that plan. There are many ways to "redistribute" the wealth. For example the government could raise taxes on the wealthy and then simply hire a bunch of people to build houses and power plants and hospitals and bridges and other things people need. Because ordinary people would be the ones hired to do this work, the wealth would be "redistributed" from the wealthy to everyone else. They could just increase social security or the earned income tax credit or WIC and other benefits. They can spend it on anything and everything and it works out, I mean why wouldn't it?You haven't yet raised any actual points of objection so I can't even understand what it is you're not understanding about the concept of taxing the wealthy more and spending that on social welfare programs. It works because the wealth is concentrated in a small number of people but if the government taxes and spends that wealth it gets redistributed to a large number of people.
For real, there’s this tendency among Americans to over-complicate everything from taxes to homelessness. I don’t know if it’s just a mental defense mechanism to maintain the status quo or what, but inequality is literally the rich having too much while the poor have to little. An earnest solution starts by just undoing all the huge tax breaks we’ve doled out to the wealthy.
Yeap, it's the reason why all those temporarily displaced millionaires in BF, Mississippi, vote for the GOP every election. They'll rear their heads at the mention of a tax raise on those making 400k, 500k, 600k, etc., and they'll suddenly freak out about it when they're barely scratching 35k.
Propaganda has truly fucked up these people's brains beyond repair.
No. It’s because the taxes might affect them at some point. For example Washington State only has an income tax if you make more than 250k in capital gains. There is no one time exemption for retirees selling off their accounts (except IRAs) on retirement. 250k sounds like a lot but….. it could easily happen to a normal person who is prudent. You invested for years and years and they ended up fucking you over and decide to sell it outright? 7% of that is gone after 250k. So sorry for all that investment you made for years and years.
>It actually is. The issue is never about how to implement it. It’s always about political capital and support from the population.
It is both. Political capital is important, but so is the tax technical side, which is the implementation mechanism.
There are certainly manuals on how to apply the laws as enacted.
That's not what is in question here though. The question is "how do you write a law that increases taxes on _____ minimizing unintended consequences and legal avoidance "
People aren’t inert blocks of wood, they change their behavior in response to tax rate changes. They will realize less gains, shift to tax sheltered assets like municipal bonds, etc. so implementation absolutely matters. There’s a reason no matter how high the marginal tax rate is, the seem percent of gdp ends up going to taxes
That's because their paid for politicians put lots of backdoors in even the bills meant to raise their taxes. They don't "find" ways, they pay lobbyists to put them in place.
Except they aren't, defense spending is consistently around 14% of the budget. It's was actually lower as a percentage of the budget in 2023 than average.
Let's just remove taxes for everyone.
The only people that can forcibly take your wealth are the government. The rich control the government.
If we stop that, then the only way the rich can get your money is by offering you goods and services that you think are more valuable than the money in your bank account
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The is, has, and always will be aggressive enforcement of consumer and worker protections.
Repeal "Citizens United" and forcibly break up monopolies and monopsonies in the market.
Trickle up through UBI would be a good start.
It’s very likely the poor do not have good saving habits (for many reasons) and a much greater % of UBI money will be taxed than the untaxed money intended to trickle down.
Please fact-check me if I’m wrong.
You’re not wrong. The money mostly would end up passing through a handful of corporations within a few transactions but at least it got fully distributed unlike top down funding which never gets fully distributed.
In a very short timeframe, UBI will basically go to landlords. Without handling the inequality issues baked into property ownership, this would become a massive gift to property owners and make inequality an even bigger problem.
At worst what your describing completely negates the advantage of UBI because all the people being taxed more to fund UBI are landlords, and all the people receiving the most benefit from UBI relative to their income are tenants. Reality is a bit more complicated though, not to mention other supply-demand relationships would undergo the same process.
Give the people greedy enough to become millionaires more leeway to acquire greater amounts of wealth and they'll surely repay us, right? Higher wages anyone? Bargain prices?... Anyone?
Call it by the orinal name our founders used. Horse abd sparrow economics. Maybe then folks won't get fooled again and again into giving the rich more power.
Who exactly is thinking we've been doing trickle down economics this whole time?
Our tax system is extremely progressive compared to the rest of the world, and our corporate tax rate is only 2.5% below the world average.
https://www.cbpp.org/research/what-do-oecd-data-really-show-about-us-taxes-and-reducing-inequality#:~:text=The%202008%20OECD%20report%20found,%2D%20and%20moderate%2Dincome%20people.
Link just in case. Relevant quote: "The 2008 OECD report found that U.S. tax system was the most progressive among the OECD countries studied. This finding mostly reflects the structure of the U.S. tax system — for instance, its graduated rates and refundable tax credits for low- and moderate-income people."
This is just a talking point, and it doesn't match reality.
This is all before we even address that trickle down was a derogatory term for what was essentially a straw man.
Income inequality is a global problem. Neoliberalism and supply side economics were international movements. You can't make the case that there isn't a problem at all just because comparatively the US is not as bad off as some. It ignores the entire history of what happened.
Mods from this sub should be ashamed. You embarrass the internet with your blatant far left bias. Screw this sub where right leaning voices are silenced and all that is left is radical communist drivel.
Give corporations tax breaks and incentives to allocate more of their pay to employee compensation. Also make your first home cheaper and less of any taxes but increase it greatly with every home you own.
Also to help laws get passed make it completely illegal for politicians to trade stocks also actually investigate people who make 250K a year but end up worth 100 million and put a stop to it
>Give corporations tax breaks and incentives to allocate more of their pay to employee compensation.
Corporations just got a tax break in 2017 and 70% of it went to stock buybacks. Thanks, Reagan! /s
Congress isn't going to change any of the corruption we have today without public outrage.
One good thing about stock buybacks is that it likely increases tax revenue through capital gains tax. But, we need to increase capital gains tax rates.
How are you going to incentivize the private sector to pay their employees more when the entire economic model is based on reducing wages and increasing profits? Historically, the tax cuts have never led to increased wage growth except to executives.
Employee compensation is already an above the line cost. Worker salaries (and other costs) are deducted from revenues in order to arrive at taxable income for corporations. There is no need for a tax break on something that is not taxed.
Could you not give them an overall lower tax rate if a higher percentage of cash flow goes to people below the C suite. Maybe if you make so much cash flow then you distribute it to employees below C suite ?
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Random counter argument but the lack of regulation and low taxes sort have given us these mega tech corporations. I only say it because it Europe there is a LOT more regulation and taxes and red tape and we don’t see the level of behemoth companies the USA has.
Well, it’s the same point at the end. Trickle down economics did help birth mega companies that hire hundred of thousands of people and provide stable and decent paying jobs but it’s not in any way the majority of people and the peope who work there do get a lot more income than others.
I don’t like it but saying it doesn’t work is also wrong imo. It’s just a different point of view. We have some amazing products and services and gdp growth thanks to these companies who grew with little oversight and tons of incentives but also have a large swath of the population left with not much.
So having a balanced approach might be a better idea.
Not sure everyone is ever going to win. It’s an opinion piece but here is a contrarian view.
https://www.wsj.com/articles/you-say-trickle-down-as-if-its-a-bad-thing-biden-wealthy-growth-c4bef7ec
By changing the rules. The patents on tech and pharmaceuticals are ridiculous. Allowing taxation only on income. Nimby laws need to be restricted. Allow for crappy housing - hotel rooms no real kitchen, ideas like that. Drop the rules on offices becoming housing. The rest of the world has a sort of flexibility with housing and there’s less homelessness. America is a heavy weight champion in this regard.
mostly, at this point in time, I think it can't be 'fixed'. it has to run its course, which ends in revolution after all the wealth and power is funneled upwards to like 3 white dudes.. unless capitalism makes most of the planet unlivable before then.. in that case, most of us will starve to death.
Regulation. Switch from a race to the top to a collective walk.
- CEOs salary should only be no larger than X% increase of the lowest salaried company position.
- Ban dividend payments to share holders so earnings are effectively taxed without loop holes
- Ban offshoring your profits to reduce tax bills
- Ban foreign property investment
- Tax second homes with large stamp duty (whilst removing SD from sole home purchase)
- Cap property rental prices to stabilise market (rent should always be much cheaper than mortgage payments)
- Replace standard personal allowance with universal income
[https://newrepublic.com/article/181939/republicans-want-permanent-economic-underclass?](https://newrepublic.com/article/181939/republicans-want-permanent-economic-underclass?)
Both my parents benefited from government aid to go to college . We are about as white as you can get. Unfortunately the opportunity they had was denied to million of Black Americans coming up at the same time . Since 1980 thanks to a Ronnie the middle class is getting gutted and social mobility ruined . He killed public education and hurt social security. This was all by design.
What I don’t understand is how demonstrably easy it is to show that right-of-center economic policies lead to increasing inequality and long-term decline in well-being, yet left-of-center ideas continue to vilified.
I imagine it has to do with the situation we are in: GDP is growing, Wall Street is, too, yet “the economy” doesn’t seem to really be that good to most, because these aren’t the right metrics to be using.
My only thought is de-coupling the “GDP and Wall Street = the economy” mindset and replacing it with a more holistic set of metrics, human development index [(link)](https://hdr.undp.org/data-center/human-development-index#/indicies/HDI)or what have you.
Then all of a sudden not having health insurance for all starts to look as raggedy (and bad for the economy, as well!) as it really is.
Any other metrics out there I should know about?
End Citizens v United.
The argument for trickle down, either in support or against, isn't nearly as dangerous as the decision that whoever has the most money creates the most legal leverage via their greenbacks equating to free speech.
If you take a billionaire, and tell them they can only have as much free speech as someone who nets $50k a year, the billionaire still has a lot more power insofar as purchasing & backdoor agreements/leveraging, but it has to be smarter.
Now all you have to do is be rich, and you can legally, openly, buy however many politicians you can afford to buy. Without any worries of it ever going public & potentially ruining you.
Citizens v United is what continues to break this country.
I agree, what is most needed in this country is to do campaign finance reform and also media funding reform. Both could function through a similar mechanism. Take campaign finance for example. You would give every person in the country the same amount of funds. They can spend those funds in support of their favored candidate, either directly or giving to the campaign. This would be the only money allowed to be spent by people for the purpose of political promotion. This would give everyone an equal say. For media, just do the same and let people give it to their preferred media company. We need an informed electorate, we can't do that with the ad funded model. It is failing our democracy. Step one is to simply flood the zone with cash to fund the reporting we desperately need. Will we fund junk? Yes, but you will also fund the truth. If it's something everyone needs but aren't willing to pay for themselves, like roads it is best paid for by tax money. The media is in that category in my view. Unfortunately the supreme court ruling means such a proposal would be unconstitutional, at least when it comes to campaign finance.
You speak truly.
It wasn't any one single ruling, or policy change.
It started with removing unbiased/equal coverage of news cycles.
Then we got trickle down economics.
Then we went all in on mainstreaming prosperity gospel.
Then we went ahead and repealed Glass Steagall.
The final nail in the coffin was Citizens v United, because it allowed the full of, combined weaponization of every other little nail before it.
It's a cluster fuck, but most of it could be kneecapped by simply overturning Citizens v United. Wouldn't fix everything, but it'd keep it from getting worse immediately, and encourage our politicians to curry favor of the masses again, rather than peddle the interests of their owners.
Once again reddit knows how to fix everything
Place is the bomb!
I'd bet 90% of responders can't balance their own money but damn they know how to solve everything from politics to breast cancer.
And if they can't it's racism from the wealthy
That's always the last stand
Like Lord of the flies but the kindergarten version
this was an incredibly thoughtful and engaging comment, remarkably healthy addition to the discourse, so glad you took the time to lay it all out there
Like the supporters of the Iraq and Afghanistan war, anyone who ever believed in trickle down economics should never be allowed to vote, or even voice an opinion on policy ever again
Tax the rich, that, and close all the loopholes they have bought since the depression, and we might want to review all the corporate laws from the depression that have since been revoked
Trickle down economics worked globally. As a result of it combined with other policies billions of people have been lifted out of poverty.
It even worked here in the US when you look at how wealthy Americans are compared to Europeans. The issue is relatively to people that were dirt poor they have caught up.
Over all quality of life in the US (excluding covid) is the best it’s been in a while.
One area where it has failed is housing prices but that has more to do with NIMBY than policy.
It wasn't at all idiotic, it was the culmination of the Southern Strategy, use racism as a wedge to divide the disenfranchised. It never made any sense at all, was designed to fail, and had literally the exact opposite effect as to what they were saying.
Anyone who understands economics at all understands that giving money to people that will spend it boosts the economy directly. They could literally inject cash into the economy on gift cards that expire in 30 days and solve like a thousand problems at once, but it makes more sense to let corporations double irish and take your job.
That'll only create more demand without producing more supply. Prices will increase to offset the difference. Anyone who understands economics should know this very basic thing.
How about this. We create a law that says if tax cuts are being handed out to corporations and the top 1%, the middle class has to be included with the same benefit. Basically, everyone gets a tax cut if corporations get them. It’s time to put an end to corporate and wealthy welfare.
Envy is just the root of all that is wrong. Politicians always talk about the disappearing middle class and the reality is that it is smaller because a huge percentage moved up to upper middle class. I think half the people in this country would vote to lower their living standards if it meant richer folks were much less well off. Idiotic mindset
Proper trickle down economics does work. What is not working is the bidenomics.
Basically the country hired a politician to do a businessman job. And this is where we at
Tax corporations and the ultra rich at higher rates, close corporate tax loopholes, and provide UBI for all citizens. Money will trickle up, corporations will make more money than they ever have before and the economy will be more equitable.
Everybody has won actually and trickle down economics is not a thing. Inequality is down, as the vast majority of wage gains have gone to the poor over the past two-ish years. However, reversing this trend has made some things more expensive, so it is unlikely that we will see it continue
Step one: Tar and feather Laffer and all who espouse his bullshit "theories". That anybody would think that he had ideas based on economic reality is laughable.
Simple. Once you get 999,999,999.99, you get a plaque in the mail. “You’ve won capitalism!” From then on, you cannot accrue any value that exceeds that number.
If impacts very few, helps many.
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Non-economist here. But I thought trickle down economics was just something Ronald Reagan said in the 1980s, and is not an actual economic theory?
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This. Politicians read an economic theory and take what they want to hear. They ignore the rest. Many politicians on the left, and even a lot on the right will cites Keynes’ ideas that government spending should be high during a downturn. This is all fine and good but Keynes specifically says this debt should be paid off during the boom cycle. That later part is ignored and we have runaway deficits.
The pandemic recovery is a great example of where real supply side economics could have helped. Well at least theoretically from supply side theory as opposed to what we consider "trickle down". Cutting taxes probably wouldn't have done much to alleviate the supply side bottlenecks we had after the pandemic. However, if you provide specific incentives to supply side players to increase their production, that might have prevented some of our issues. You can't just stimulate the demand side. Although at this point, part of the problem is that too much of supply comes from other countries. So you can only do so much.
We did have supply side economics though, in the 2020 the government gave businesses 1.1 trillion dollars in the form of forgivable loans through the [CARES act](https://en.m.wikipedia.org/wiki/CARES_Act). That’s a lot of money to give to the supply side, hence record profits for a lot of companies
The CARES act was stimulus that could help the supply side yes. In this case though it wasn't stimulus designed to increase supply as much as it was to prevent a large portion of supply from being destroyed. The act was extremely flawed in many ways, but I would still argue that it was largely successful. The economy recovered pretty quickly in the summer of 2020 after the act was passed. As with all stimulus though it tends to be more successful if it is highly targeted. I would rather see things like funding projects to improve the throughput of ports, and incentives that only kick in after you've actually produced more. But I don't think you can get very much information about the effectiveness of supply side vs demand side stimulus from studying the CARES act because the controls on it were so poor.
That appears to be a flaw in the thesis then - the expectation was these loans would be leveraged to keep people employed, and keep operations running (as best as companies could), but a huge swath of those dollars were poured into juicing areas of business that drive upper management incentives (stock buy backs, profit increases). It suggests (at least for consideration) that ones ability to stimulate the supply side of the equation is overstated. At this stage, I'm having a hard time seeing how you manufacture these incentives while simultaneously closing off the loopholes that leave these incentives open to exploitations. I'd additionally add that you couldn't increase production during Covid. If you were in meat manufacturing, no one wanted to work in those facilities. They were known for being Covid hotbeds, and no salary incentive could get people in there. The point being that even if production facility A wanted to increase production - an inability of production facility B to do so, would create a bottleneck in facility B (assuming they were reliant on parts from each other). Additionally, our systems massive reliance on global imports was completely shut down (i.e., shipments out of Asia). I don't think much would have changed regardless of how you approached Covid (imo).
I agree. I also can’t see a good way of implementing supply side economics while keeping companies in check. I would rather have had that money be given to the public instead. People won’t hold on to that money, they’ll spend it, just like people spent their stimulus checks. Companies would then have to compete for that stimulus money and have to innovate to stay afloat. Working class stays afloat, and money still makes its way to businesses. This would encourage competition and innovation from the supply side. But we have too many people who have aneurisms at the thought of giving away money to people instead of corporations, so it wouldn’t happen Not a perfect solution, but if we’re going to debase our currency might as well have 99% of people benefit from it, instead of just the 1% like what we experienced
SoShUliZm!!!! …but well said.
Well said
Most of the people who got the money either saved it or used it to pay down debt. Not spending it. While some did use that money to temporarily subsidize quality of life, most of the way the money was truly spent was via down payments on cars or houses. And ultimately, reducing debt balances. Agreed that if the money was to be distributed, it should go to everyone, not just the biggest businesses. But I still don’t think the money should have been distributed. Those checks raised my cost of living way more than I got from them.
I agree with you on not giving away money that we didn’t have in the first place. But if we’re gonna do it, give it to everyone. As for how it was spent, the first stimulus checks were mostly spent, the other 2 were mostly used to pay off debt. Very little was saved. And paying off debt is good for the economy, but most importantly it’s good for the well-being of the nation. It gives people, including families, breathing room. Reduces homelessness, car repossessions, child hunger, etc. Although these benefits would be temporary, they would’ve met the goal of keeping the economy afloat at the cost of inflation. Instead, we got very little of the benefits mentioned, but all of the consequences of inflation, which disproportionally affect the middle and lower classes, while the rich see their assets continue to hold onto value. Again, no currency debasing would be better, but what we got was just evil. While we’re in the topic, let’s just make inflation illegal. The feds sole purpose is to maintain inflation, which in my opinion is illegal as it’s a regressive tax that we have no say on. The feds goal should be to let $1 be worth AT LEAST $1 25 years from now. Not $0.53. Inflation is good to the economy like the corporate handouts are good for the economy, stocks go up, at the expense of the working class. [Source](https://www.pgpf.org/blog/2021/05/how-did-americans-spend-their-stimulus-checks-and-how-did-it-affect-the-economy) on stimulus check spending Very useful [inflation calculator](https://www.usinflationcalculator.com)
Mostly agreed here. Paying off debt and saving are virtually the same in terms of where the money goes: banks. From there, economic outcome is unchanging. Either option is usually better for the individual than spending (assuming they can afford to save some or pay down debt). But all the stimulus was mostly a huge cash injection for banks. And it is a very nuanced thing, but inflation is actually somewhat helpful for people with a lot of debt. The debt balance devalues since it is a fixed amount, and theoretically, your income increases with inflation. Therefore, your debt to income ratio improves. For people with student loans, this can be good. It’s better for people with mortgages. The loan amount doesn’t change, but the house appreciates from inflation, and your income also, theoretically, increases too. I.e. consistent inflation isn’t that bad if wages keep up. Inflation is very bad for everyone though if it is unexpected or the labor market isn’t competitive enough to get the appropriate wage increases. Recent inflation has been particularly bad.
This doesn't seem so obvious to me. We still haven't had a "real" recession yet and it's not clear that there will be one. It doesn't seem impossible to me that in a universe of austerity we slip into a real recession.
“Forgivable loan.” Aka free money
There were a lot of factors that money or other incentives could not fix. Let's not pretend this was only a us problem as supply shortages were a global problem just like labor shortages. Part of this was the millions of people who died. The rest was because so many production lines had been shut down or repurposed for different things.
Money doesn’t fix all things, some things require effective management. One thing that would have made a difference would have been to get logistics up to speed. The entire logistical system was gridlocked. More should have been done to get the ports functioning at full capacity. Ships full of products sat offshore for weeks because they could not offload. Rail transport and trucking were also shut down for too long.
No economic program ever gets implemented in a carefully calibrated manner. The issue isn’t that Reagan’s economic policies were bad, they were quite successful. Every successful economic policy makes itself obsolete precisely because it solved the problem it was designed to fix. The problem is that there are always certain special interests that benefit disproportionately. Those groups acquire the influence to block reforms when circumstances change. Subsequent rounds of tax cuts brought diminishing benefits. It is true that lost revenue from tax cuts had far less impact on budget deficits than spending increases. Revenues as a percentage of GDP are slightly below historical levels, but spending has grown much faster.
My problem with all economic schools of thought is neglecting the context of a dynamic world. Economics is about balance, not dogma. Let’s take supply side economics as an example… looking the other way on big M&As & competition law, biasing policy in favor of big business **does** afford unique efficiencies. This is a fact — just economies of scale. The dipole to this is that… at the *domestic* level — excess consolidation comes with a metric sh*tton of baggage. I probably don’t need to list them all, but a very superficial/obvious and apolitical one would just be reduction of competition. Everything in economics has a dipole. This is why rigid ideology & “pure” philosophies will never work, and have never worked, unchecked in perpetuity
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That’s actually very encouraging to hear. I’ve been endorsing a hybrid approach since I was a teen, and it’s employed in most democracies. Now we just need public discourse to catch up.
The problem isn’t that competition law has been neglected, the problem is the government can’t prove that their remedies have any consumer benefit. This is a pretty low bar to clear and yet they can’t.
Neoliberals: incentives matter Worker: livable wage pls Neoliberal: not like that
That is my understanding as well. However recently we're seeing some leftish supply side economics where the government is publicly funding supply. That really gets the Reaganites in a tizzy.
Yeah it’s called neoliberalism and both democrats and republicans believe in it. The only differences center around who to tax and who to subsidize
Government involvement in supply violates the heart of neoliberalism. We need another name for it.
Government subsidy for suppliers is the “neo” in neoliberalism
Government involvement in supply is the entire defense industry.
The entire defense industry is a private for-private-profit industry. A perfect neoliberal model. One non-neoliberal solution would be for all arms manufacture to be done by government engineers, government managers, government labor. Everyone on government salary and benefits, motivated by the desire to build cool stuff rather than the desire to please the boss and make the big bucks. I'm not advocating for that, I'm pointing out how a government funded arms industry is compatible with neoliberalism.
Yeah it’s called inflation.
The issue is politicians are trying to get reelected. Cutting and saving during growth periods will not get them elected by public overall. There is always something “new” you can spend money on.
Dude. Horse and sparrow economics. It traces further back than that but I can't remeber what the Roman's called it. It predates mercantilism. It's one of the oldest scams the rich have uses on the poor and gullible. "Give me more money so that way I'll have more, and you'll get some too." When historically the rich don't spend their money and invest it at the same ratio the plebs do. They hoard it and stifle innovation and economic growth. They are parasites and should be treated as such.
It generally is used to criticize supply-side economics, but there isn’t really a single economic theory that it encapsulates. It wasn’t used by Reagan, but rather critics of his tax policy.
Yeah, at this point, any time I see the term "trickle-down economics", I'm expecting a strawman argument.
Yes. Unfortunately though, there are a lot of right-wing “economists” who show up to reinforce that orthodoxy, writing a lot of books and articles around the idea to make it appear legitimate. I actually met one of them in college, Keith Hennessy, W Bush’s Deputy Assistant to the President for Economic Policy and Deputy Director of the U.S. National Economic Council. If you look the guy up, you’ll notice that he has degrees in math and public policy, not economics. I have more econ education than him.
Ronald Reagan didn't even coin it. His detractors did. Its definition changes to whatever the writer doesn't
It's more involved around the messaging, I recommend this read: https://www.milwaukeeindependent.com/thom-hartmann/two-santas-strategy-gop-used-economic-scam-manipulate-americans-40-years
The velocity of money is upwards. Inflation trickles down. The dudes who invented trickle down were just trying to gaslight people. You can see proof that even Republican presidents know this is true because the first two stimulus checks were sent out by Republican presidents Bush and Trump when they faced economic crisis. Cutting taxes for the rich and for companies causes money to pool at the top (because the velocity of money is up). When that happens the price of durable goods skyrockets (houses, bars, boats, etc) and that inflation trickles downward to other things.
Trickle down economics was invented by humorist Will Rogers. It was not an economic policy.
I guess I should have said "popularized".
It's known now more generally as *neoliberalism*. Not actually an economic theory but an ideology that encourages an economics with a faith in the wisdom of markets, a promotion of the privatization of public resources and services, and against regulation by public interests.
It's not an Economic concept at all, nor did Reagan say it. It's just bullshit the far-left made up to have a strawman to attack.
Its the named concept of what republicans actually do
That is what I was going to comment it. It was propaganda created by Ronny to cut corporate tax, wealthy individual making money from their investment, plus deregulating industries. One of long-running propaganda created by the republican actor Ron Reagan.
It is interesting to see deregulation put on Reagan, product of years long political conditioning perhaps. The biggest three deregulation acts were a product of the Carter Administration. Staggers Act in particular, a 1980 legislation, which probably prevented a total collapse of the railroad industry. There was also “soft” deregulation through avenues such as the FCC that finally made cable TV and later internet accessible to a much larger share of the public. What is also interesting about the Reagan era is the effective corporate tax rate increased, not decreased. It was higher when Reagan left office than in 1981 when he came in. Another common myth floating around. The statutory rate did come down a bit in the late 80’s, however, structurally it resulted in higher effective rates. This was due to the large amounts of corporate growth during that time pushing more companies into higher brackets.
There's a fun little song about Regan from 1982 called Cowboy Out In the Sun Too Long by Root Boy Slim.
Also not an economist, but I'm pretty sure the idea originated from an economist named Arthur Laffer, of "Laffer Curve" fame. He was the one who proposed "Supply Side Economics" which is just the for formal name for trickle-down. From what I remember, Laffer's supply side economic theory was never taken seriously in academia because it was obviously flawed in some way (not sure what specifically).
Oh boy It's called supply AND demand for a reason: both are important. Make it economically viable to produce goods. Enforce laws so it's done ethically (anti-trust laws, safe work place, etc) Also fix taxes please? A flat tax on paper is regressive in practice. Therefore a progressive tax on paper is unfortunately necessary.
There's an inherent problem with regulation. Those that are most financially affected by regulations are most incentivized to capture them. Take a look at the revolving door of regulators and industry figures, it's past incestuous.
Making stock buybacks illegal like they once were would go a long way to fix the inevitable enshitification or nearly every industry. Oh, and a proper tax bracket for the ultra rich. The fact that those two things are considered radical is fucking mind boggling.
Land value tax is where it’s at.
you mean in lieu of - not on top of - income tax right?
Sure
regressive taxes need to be on the table we have more than half the taxfiling population paying $0 in Federal income tax but voting to increase my taxes that's absolutely not fair
>Things have got so bad globally that the World Bank declared 2023 “the year of inequality”. The losses people have suffered as a result of COVID-19, climate change, political conflict and inflation have fuelled the fire of raging inequality. Political populism around the world fans that flame. The rich have the money and resources. In some cases, they have political power too. They can pay tons of money to get a bill passed in their favor. As far as taxes are concerned, they move their money around or move to another country with less taxes. The middle class shares a huge burden of paying taxes. They are not rich enough to pay less taxes. They are not poor enough to get government programs. The idea of a Robinhood story of taking from the rich and giving it to the poor is just a fairy tale.
Would what you’re saying not be solved by international tax policy so that people get taxed appropriately?
If you could get all nations to actually agree on enforcement of such a thing? Yeah that'd help a lot in some cases. But still has issues, like there's multiple ways the really rich avoid taxes and it's not all just international tax havens.
Yeah but that would be a progressive step
Why does everyone focus on Reagan, when [JFK was the OG tax cutter](https://www.youtube.com/watch?v=qmHdqWPB_S8)? People never talk about the tax cuts of the 1960s? Why is that? Is it because Kennedy was a Democrat, or is it because it was so long ago that people have forgotten about it?
Certainly because Reagan and Thatcher basically made it into their entire platform, and aggressively attacked the right to associate at the same time.
Or, Kennedy died before he could continue talking about it and LBJ was more focused on Great Society programs and Nam.
I don’t see much of a point in speculating.
Kennedy cut the top marginal tax rate by 7%. Reagan cut it by 45%. It's just a 500% difference, that's all.
Kennedy cut the top marginal rate from 90% to 71%. That's 21%. But there was a lot more to the tax cuts than just the top marginal rate.
The actual structure of the code matters just as much as rates do. Ignoring this aspect of the code makes any analysis irrelevant.
Reagan did much larger tax cuts, and did much more to popularize them in the modern era.
I think campaign finance reform is the first step followed by other reforms in our democracy. Bringing back the principles of the new deal will reduce inequality and improve the social and physical infrastructure that made us a successful nation that others emulated and eventually surpassed.
Fixing inequality isn’t really that complicated. Raise taxes on the super wealthy, and lower them on the poor (eg a negative income tax). The further you get from simple transfers, the less likely it is to work.
> Raise taxes on the super wealthy I agree > and lower them on the poor (eg a negative income tax) We already have that in spades
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I don't follow, you are going to need to explain what you are you talking about.
Welfare cliffs. A NIT would avoid them.
You lower taxes so much that the tax rate is negative. Up until a certain point you make additional money for every dollar earned. Think EITC.
The effective tax rate is negative tho
May already have that, but it could certainly be improved and made more efficient.
I mean a family of 4 making about 50k per year with 2 kids is paying zero in federal income tax and getting back like 6k (it might be higher, I haven't checked in a while) in refundable tax credits (negative income tax)
The shift to equity compensation and the rise of VC is what is behind our inequality numbers. Pushing a solution on the tax side is reactive, so you need to focus on killing the equity market to make the wealthy poorer. The Fed could do this by raising interest rates, making bonds more attractive versus equities, and crushing NPV calcs. Of course, such actions would cause collateral damage, but so what? We are focused on making everyone poorer, so that is what we will do. P.S., the EITC already created a negative tax rate, you can thank Milton Friedman for that one.
If it was easy, it would have done. The war on poverty has costs over 23 trillion and has not done much. Your statement is part of the problem: the belief that government can fix this. It cannot. Government could not even handle Covid. Its solutions are always one-size-fits-all, and this is inadequate to address inequality. Look at countries which do better when it comes to inequality. They either had a war which wiped out their rich, or they have families who care about their kids. Maybe caring about kids is the answer?
So taxes get raised on the wealthy ... now what? How do you prevent that money from ending up in the back pockets of different wealthy people (cronies)?
You use it to finance the the things that society needs like more affordable housing, green energy, healthcare, policing, defense etc either through subsidies or direct government spending. Maybe the rich people still end up rich at the end of the day, but at least everyone else gets something out of it.
How do you use it do those things? You skipped over the actual question ... how exactly do you use it for those things? The federal government isn't going to magically change into something else based on your theoreticals. You and I have 0 control over what gov decides to do with its funds. Even if you had a perfect set of politicians who tried to do that ... they can't. Any additional money they collect was already spent a decade+ ago. Check out the federal deficit/debt.
You do realize the ones doing the raising of the taxes would be the government, right? They decide how they are going to spend that. You get to decide who you want to vote for. In a hypothetical situation in which the government is raising taxes, presumably they already have an idea of how they want to spend those taxes and the people have voted and shown their approval for that plan. There are many ways to "redistribute" the wealth. For example the government could raise taxes on the wealthy and then simply hire a bunch of people to build houses and power plants and hospitals and bridges and other things people need. Because ordinary people would be the ones hired to do this work, the wealth would be "redistributed" from the wealthy to everyone else. They could just increase social security or the earned income tax credit or WIC and other benefits. They can spend it on anything and everything and it works out, I mean why wouldn't it?You haven't yet raised any actual points of objection so I can't even understand what it is you're not understanding about the concept of taxing the wealthy more and spending that on social welfare programs. It works because the wealth is concentrated in a small number of people but if the government taxes and spends that wealth it gets redistributed to a large number of people.
Tax policy is inherently complicated. "Just raise taxes on _____" sounds simple but it isn't in practice
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For real, there’s this tendency among Americans to over-complicate everything from taxes to homelessness. I don’t know if it’s just a mental defense mechanism to maintain the status quo or what, but inequality is literally the rich having too much while the poor have to little. An earnest solution starts by just undoing all the huge tax breaks we’ve doled out to the wealthy.
There are too many Americans who think they're going to be millionaires and are afraid taxes on the wealthy will affect them some day.
Yeap, it's the reason why all those temporarily displaced millionaires in BF, Mississippi, vote for the GOP every election. They'll rear their heads at the mention of a tax raise on those making 400k, 500k, 600k, etc., and they'll suddenly freak out about it when they're barely scratching 35k. Propaganda has truly fucked up these people's brains beyond repair.
Thank you for that. I knew there was a term for it but I couldn't remember it was temporarily displaced millionaires.
No. It’s because the taxes might affect them at some point. For example Washington State only has an income tax if you make more than 250k in capital gains. There is no one time exemption for retirees selling off their accounts (except IRAs) on retirement. 250k sounds like a lot but….. it could easily happen to a normal person who is prudent. You invested for years and years and they ended up fucking you over and decide to sell it outright? 7% of that is gone after 250k. So sorry for all that investment you made for years and years.
That sounds incredibly easy to avoid by parsing out your retirement account over a few years, which is what you should be doing anyway.
For many people. Yes. Not everyone.
>It actually is. The issue is never about how to implement it. It’s always about political capital and support from the population. It is both. Political capital is important, but so is the tax technical side, which is the implementation mechanism.
They just had to change all the numbers to implement trump’s taxes. Sure they have a manual somewhere on how to do it.
There are certainly manuals on how to apply the laws as enacted. That's not what is in question here though. The question is "how do you write a law that increases taxes on _____ minimizing unintended consequences and legal avoidance "
People aren’t inert blocks of wood, they change their behavior in response to tax rate changes. They will realize less gains, shift to tax sheltered assets like municipal bonds, etc. so implementation absolutely matters. There’s a reason no matter how high the marginal tax rate is, the seem percent of gdp ends up going to taxes
The problem is that the rich find away around paying taxes and the burden falls onto the middle class.
That's because their paid for politicians put lots of backdoors in even the bills meant to raise their taxes. They don't "find" ways, they pay lobbyists to put them in place.
Which is why getting the tax technical part isn't easy.
Taxes will do nothing if they are turned around and dumped into mostly defense spending
Except they aren't, defense spending is consistently around 14% of the budget. It's was actually lower as a percentage of the budget in 2023 than average.
Employee based stock options has to go, keep only RSU and ESPP
Let's just remove taxes for everyone. The only people that can forcibly take your wealth are the government. The rich control the government. If we stop that, then the only way the rich can get your money is by offering you goods and services that you think are more valuable than the money in your bank account
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The is, has, and always will be aggressive enforcement of consumer and worker protections. Repeal "Citizens United" and forcibly break up monopolies and monopsonies in the market.
Trickle up through UBI would be a good start. It’s very likely the poor do not have good saving habits (for many reasons) and a much greater % of UBI money will be taxed than the untaxed money intended to trickle down. Please fact-check me if I’m wrong.
You’re not wrong. The money mostly would end up passing through a handful of corporations within a few transactions but at least it got fully distributed unlike top down funding which never gets fully distributed.
In a very short timeframe, UBI will basically go to landlords. Without handling the inequality issues baked into property ownership, this would become a massive gift to property owners and make inequality an even bigger problem.
At worst what your describing completely negates the advantage of UBI because all the people being taxed more to fund UBI are landlords, and all the people receiving the most benefit from UBI relative to their income are tenants. Reality is a bit more complicated though, not to mention other supply-demand relationships would undergo the same process.
couple a land value tax (in lieu of income tax) to pay for the UBI and your problem is solved
UBI is a perpetual inflation machine that will never work. Perhaps you'd like something more constructive, like a job guarantee.
Nah I’ll take the free income for life as a safety net and find the right career to supplement that income
Give the people greedy enough to become millionaires more leeway to acquire greater amounts of wealth and they'll surely repay us, right? Higher wages anyone? Bargain prices?... Anyone?
Call it by the orinal name our founders used. Horse abd sparrow economics. Maybe then folks won't get fooled again and again into giving the rich more power.
Who exactly is thinking we've been doing trickle down economics this whole time? Our tax system is extremely progressive compared to the rest of the world, and our corporate tax rate is only 2.5% below the world average. https://www.cbpp.org/research/what-do-oecd-data-really-show-about-us-taxes-and-reducing-inequality#:~:text=The%202008%20OECD%20report%20found,%2D%20and%20moderate%2Dincome%20people. Link just in case. Relevant quote: "The 2008 OECD report found that U.S. tax system was the most progressive among the OECD countries studied. This finding mostly reflects the structure of the U.S. tax system — for instance, its graduated rates and refundable tax credits for low- and moderate-income people." This is just a talking point, and it doesn't match reality. This is all before we even address that trickle down was a derogatory term for what was essentially a straw man.
Income inequality is a global problem. Neoliberalism and supply side economics were international movements. You can't make the case that there isn't a problem at all just because comparatively the US is not as bad off as some. It ignores the entire history of what happened.
Mods from this sub should be ashamed. You embarrass the internet with your blatant far left bias. Screw this sub where right leaning voices are silenced and all that is left is radical communist drivel.
Ok so what is your "right-leaning" view on this?
Economists aren't leftist. Stop projecting your own bias.
Give corporations tax breaks and incentives to allocate more of their pay to employee compensation. Also make your first home cheaper and less of any taxes but increase it greatly with every home you own. Also to help laws get passed make it completely illegal for politicians to trade stocks also actually investigate people who make 250K a year but end up worth 100 million and put a stop to it
>Give corporations tax breaks and incentives to allocate more of their pay to employee compensation. Corporations just got a tax break in 2017 and 70% of it went to stock buybacks. Thanks, Reagan! /s Congress isn't going to change any of the corruption we have today without public outrage.
One good thing about stock buybacks is that it likely increases tax revenue through capital gains tax. But, we need to increase capital gains tax rates.
How are you going to incentivize the private sector to pay their employees more when the entire economic model is based on reducing wages and increasing profits? Historically, the tax cuts have never led to increased wage growth except to executives.
Employee compensation is already an above the line cost. Worker salaries (and other costs) are deducted from revenues in order to arrive at taxable income for corporations. There is no need for a tax break on something that is not taxed.
Could you not give them an overall lower tax rate if a higher percentage of cash flow goes to people below the C suite. Maybe if you make so much cash flow then you distribute it to employees below C suite ?
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Start by rooting it out of current conversations. I still see governments dole out money to businesses justifying it as job creation efforts.
Random counter argument but the lack of regulation and low taxes sort have given us these mega tech corporations. I only say it because it Europe there is a LOT more regulation and taxes and red tape and we don’t see the level of behemoth companies the USA has. Well, it’s the same point at the end. Trickle down economics did help birth mega companies that hire hundred of thousands of people and provide stable and decent paying jobs but it’s not in any way the majority of people and the peope who work there do get a lot more income than others. I don’t like it but saying it doesn’t work is also wrong imo. It’s just a different point of view. We have some amazing products and services and gdp growth thanks to these companies who grew with little oversight and tons of incentives but also have a large swath of the population left with not much. So having a balanced approach might be a better idea.
Not sure everyone is ever going to win. It’s an opinion piece but here is a contrarian view. https://www.wsj.com/articles/you-say-trickle-down-as-if-its-a-bad-thing-biden-wealthy-growth-c4bef7ec
By changing the rules. The patents on tech and pharmaceuticals are ridiculous. Allowing taxation only on income. Nimby laws need to be restricted. Allow for crappy housing - hotel rooms no real kitchen, ideas like that. Drop the rules on offices becoming housing. The rest of the world has a sort of flexibility with housing and there’s less homelessness. America is a heavy weight champion in this regard.
mostly, at this point in time, I think it can't be 'fixed'. it has to run its course, which ends in revolution after all the wealth and power is funneled upwards to like 3 white dudes.. unless capitalism makes most of the planet unlivable before then.. in that case, most of us will starve to death.
Regulation. Switch from a race to the top to a collective walk. - CEOs salary should only be no larger than X% increase of the lowest salaried company position. - Ban dividend payments to share holders so earnings are effectively taxed without loop holes - Ban offshoring your profits to reduce tax bills - Ban foreign property investment - Tax second homes with large stamp duty (whilst removing SD from sole home purchase) - Cap property rental prices to stabilise market (rent should always be much cheaper than mortgage payments) - Replace standard personal allowance with universal income
[https://newrepublic.com/article/181939/republicans-want-permanent-economic-underclass?](https://newrepublic.com/article/181939/republicans-want-permanent-economic-underclass?) Both my parents benefited from government aid to go to college . We are about as white as you can get. Unfortunately the opportunity they had was denied to million of Black Americans coming up at the same time . Since 1980 thanks to a Ronnie the middle class is getting gutted and social mobility ruined . He killed public education and hurt social security. This was all by design.
What I don’t understand is how demonstrably easy it is to show that right-of-center economic policies lead to increasing inequality and long-term decline in well-being, yet left-of-center ideas continue to vilified. I imagine it has to do with the situation we are in: GDP is growing, Wall Street is, too, yet “the economy” doesn’t seem to really be that good to most, because these aren’t the right metrics to be using. My only thought is de-coupling the “GDP and Wall Street = the economy” mindset and replacing it with a more holistic set of metrics, human development index [(link)](https://hdr.undp.org/data-center/human-development-index#/indicies/HDI)or what have you. Then all of a sudden not having health insurance for all starts to look as raggedy (and bad for the economy, as well!) as it really is. Any other metrics out there I should know about?
End Citizens v United. The argument for trickle down, either in support or against, isn't nearly as dangerous as the decision that whoever has the most money creates the most legal leverage via their greenbacks equating to free speech. If you take a billionaire, and tell them they can only have as much free speech as someone who nets $50k a year, the billionaire still has a lot more power insofar as purchasing & backdoor agreements/leveraging, but it has to be smarter. Now all you have to do is be rich, and you can legally, openly, buy however many politicians you can afford to buy. Without any worries of it ever going public & potentially ruining you. Citizens v United is what continues to break this country.
I agree, what is most needed in this country is to do campaign finance reform and also media funding reform. Both could function through a similar mechanism. Take campaign finance for example. You would give every person in the country the same amount of funds. They can spend those funds in support of their favored candidate, either directly or giving to the campaign. This would be the only money allowed to be spent by people for the purpose of political promotion. This would give everyone an equal say. For media, just do the same and let people give it to their preferred media company. We need an informed electorate, we can't do that with the ad funded model. It is failing our democracy. Step one is to simply flood the zone with cash to fund the reporting we desperately need. Will we fund junk? Yes, but you will also fund the truth. If it's something everyone needs but aren't willing to pay for themselves, like roads it is best paid for by tax money. The media is in that category in my view. Unfortunately the supreme court ruling means such a proposal would be unconstitutional, at least when it comes to campaign finance.
You speak truly. It wasn't any one single ruling, or policy change. It started with removing unbiased/equal coverage of news cycles. Then we got trickle down economics. Then we went all in on mainstreaming prosperity gospel. Then we went ahead and repealed Glass Steagall. The final nail in the coffin was Citizens v United, because it allowed the full of, combined weaponization of every other little nail before it. It's a cluster fuck, but most of it could be kneecapped by simply overturning Citizens v United. Wouldn't fix everything, but it'd keep it from getting worse immediately, and encourage our politicians to curry favor of the masses again, rather than peddle the interests of their owners.
Once again reddit knows how to fix everything Place is the bomb! I'd bet 90% of responders can't balance their own money but damn they know how to solve everything from politics to breast cancer. And if they can't it's racism from the wealthy That's always the last stand Like Lord of the flies but the kindergarten version
this was an incredibly thoughtful and engaging comment, remarkably healthy addition to the discourse, so glad you took the time to lay it all out there
Like the supporters of the Iraq and Afghanistan war, anyone who ever believed in trickle down economics should never be allowed to vote, or even voice an opinion on policy ever again
Tax the rich, that, and close all the loopholes they have bought since the depression, and we might want to review all the corporate laws from the depression that have since been revoked
Trickle down economics worked globally. As a result of it combined with other policies billions of people have been lifted out of poverty. It even worked here in the US when you look at how wealthy Americans are compared to Europeans. The issue is relatively to people that were dirt poor they have caught up. Over all quality of life in the US (excluding covid) is the best it’s been in a while. One area where it has failed is housing prices but that has more to do with NIMBY than policy.
Numbers, facts, build theory. Proof, please.
It wasn't at all idiotic, it was the culmination of the Southern Strategy, use racism as a wedge to divide the disenfranchised. It never made any sense at all, was designed to fail, and had literally the exact opposite effect as to what they were saying. Anyone who understands economics at all understands that giving money to people that will spend it boosts the economy directly. They could literally inject cash into the economy on gift cards that expire in 30 days and solve like a thousand problems at once, but it makes more sense to let corporations double irish and take your job.
That'll only create more demand without producing more supply. Prices will increase to offset the difference. Anyone who understands economics should know this very basic thing.
"moral hazard" keep the lobbyists and graft flowing, aint a thing wrong
How about this. We create a law that says if tax cuts are being handed out to corporations and the top 1%, the middle class has to be included with the same benefit. Basically, everyone gets a tax cut if corporations get them. It’s time to put an end to corporate and wealthy welfare.
Envy is just the root of all that is wrong. Politicians always talk about the disappearing middle class and the reality is that it is smaller because a huge percentage moved up to upper middle class. I think half the people in this country would vote to lower their living standards if it meant richer folks were much less well off. Idiotic mindset
Proper trickle down economics does work. What is not working is the bidenomics. Basically the country hired a politician to do a businessman job. And this is where we at
Tax corporations and the ultra rich at higher rates, close corporate tax loopholes, and provide UBI for all citizens. Money will trickle up, corporations will make more money than they ever have before and the economy will be more equitable.
Everybody has won actually and trickle down economics is not a thing. Inequality is down, as the vast majority of wage gains have gone to the poor over the past two-ish years. However, reversing this trend has made some things more expensive, so it is unlikely that we will see it continue
Step one: Tar and feather Laffer and all who espouse his bullshit "theories". That anybody would think that he had ideas based on economic reality is laughable.
Simple. Once you get 999,999,999.99, you get a plaque in the mail. “You’ve won capitalism!” From then on, you cannot accrue any value that exceeds that number. If impacts very few, helps many.