New Study Highlights Failures of Trickle-Down Economics

[TheIronMaiden]

Originally Posted by Red Slinger

I'm not being argumentative, I'm genuinely curious when trickle down economics has actually worked.

Well it certainly worked for some people. Just not 99.9% of people.

[PepsiFree]

Originally Posted by Red Slinger

I'm not being argumentative, I'm genuinely curious when trickle down economics has actually worked.

It's a pretty bold statement that definitely requires evidence, considering almost every economist, including Nobel Prize winners, have firmly agreed that it does not work and makes no sense.

Even the Pope mocks it. The Pope! If the leader of a religion which requires reliance on faith without facts even thinks it's a little too baseless, you've got problems.

Trickle-down economics has to be one of the most pervasive unsupported and baseless ideas in western history.

[Jason14h]

Trickle down economics doesn’t work if the company uses the tax break to buyback shares or pay bonuses instead of investing.

Or just put more cash into tax havens as savings

The tax system in general is the issue more so then tax rate applied. It encourage companies to use capital in ways counter productive to a trickle down system

[troutman]

This must be one of the oldest memes out there?

[Lanny_McDonald]

Originally Posted by blankall

There are situations where trickle down economics works.

Examples please.

[peter12]

Just a thought - maybe we are beyond discussing the validity of Boomer economic policies that became completely defunct around the mid-1990s?

[Mr.Coffee]

Originally Posted by peter12

Just a thought - maybe we are beyond discussing the validity of Boomer economic policies that became completely defunct around the mid-1990s?

This was sort of my point in post #2

[Ozy_Flame]

Originally Posted by Jason14h

Trickle down economics doesn’t work if the company uses the tax break to buyback shares or pay bonuses instead of investing.

Isn't this basically what happened with the Job Creation Tax Cut in Alberta since its inception? They basically operated off the advice of Jack Mintz.

[peter12]

The whole notion of trickle-down economics is basically a defunct stimulus program from the Reagan years given theoretical legitimacy by conservative think tanks since. All it did was basically wring out the last drops of Boomer productivity. It is a totally invalid mode given our current challenges such as aging demographics, technological stagnation, climate change, and massive inequality.

No matter where you stand, it is a certainty that the state will have an increase role in the economy than it has over the past few generations of economic growth.

Tax cuts for the sake of jurisdiction competitive advantage will still be somewhat important, but is already beginning to ebb - especially as more and more countries adopt ESG frameworks for their economies.

[peter12]

All of the above issues mean that we are to be having more and more intense cultural clashes over what the economy of the future looks like - taxes will be just one part of that discussion in my opinion.

[#-3]

Originally Posted by Jason14h

Trickle down economics doesn’t work if the company uses the tax break to buyback shares or pay bonuses instead of investing.

Or just put more cash into tax havens as savings

The tax system in general is the issue more so then tax rate applied. It encourage companies to use capital in ways counter productive to a trickle down system

FYP.

Basically the entire concept of trickle down economics requires unconstrained economic growth. Once you start running into the limits of resource exploitation the idea just falls apart. To even be worth while as an idea you need to hit some fairly lofty wage inflation targets while fixing tax brackets to that wage inflation without seeing a substantial increase in the cost of goods, none of it works without getting more productivity per unit of work while keep number of units of work constant. To get that extra productivity without reducing your input labour, you need more resources.

Regardless of where you stand on the argument about humanity hitting the carrying capacity of Earth. I should hope few people think the solution is to exploit resources and a faster rate than we currently are (I'm talking globally).

[iggy_oi]

Originally Posted by Jason14h

Trickle down economics doesn’t work if the company uses the tax break to buyback shares or pay bonuses instead of investing.

Or just put more cash into tax havens as savings

The tax system Greed in general is the issue more so then tax rate applied. It encourage companies to use capital in ways counter productive to a trickle down system

Fixed that for you. The same types of decisions could be made by companies even if the tax rate was near zero.

It seems like you’re trying to argue that companies are making these decisions to protest government policies that prohibit them from allowing the money to “trickle down”, but that makes very little sense since those companies could let the money trickle down to their employees in the form of higher wages before the taxman even gets a chance to interfere.

[Jason14h]

Originally Posted by iggy_oi

Fixed that for you. The same types of decisions could be made by companies even if the tax rate was near zero.

It seems like you’re trying to argue that companies are making these decisions to protest government policies that prohibit them from allowing the money to “trickle down”, but that makes very little sense since those companies could let the money trickle down to their employees in the form of higher wages before the taxman even gets a chance to interfere.

I have no idea what you are taking about. I wasn’t arguing any of that. I wasn’t even arguing anything in fact. I was making a statement that the biggest issue with trickle down economics is the current tax structures for corporations and the leadership of said companies actually encourages hoarding cash and share buybacks instead of returning the funds to the employees in wages.

Businesses are making the smartest decisions to pay the least tax. The same as every non business person on the planet does ( or should do )

If it made more tax sense to pay your employees a higher wage (cost for the business) as opposed to other options they would. However , then as a country you wouldn’t be competitive to attract companies and they can operate on other places cheaper. - and most employees would rather receive stock and see buybacks for cheaper tax rates vs a flat wage increase if they were smart.

And sure companies could just increase their costs for no reason other then altruism, and then they go broke and have no employees !

Tax cuts are usually to entice companies to operate in your country and invest their capital in your country. So while it may not trickle down and actually increase wages, the other option is no company in your country , no wages, and higher unemployment.

[peter12]

We should be far more concerned with streamlining our regulatory processes than reducing taxes.

For example, access to housing is one of the biggest drivers of inequality in this country and it has almost nothing to do with taxation. The issue is centred around how difficult it is to build enough housing supply to meet demand.

[#-3]

Originally Posted by Jason14h

I have no idea what you are taking about. I wasn’t arguing any of that. I wasn’t even arguing anything in fact. I was making a statement that the biggest issue with trickle down economics is the current tax structures for corporations and the leadership of said companies actually encourages hoarding cash and share buybacks instead of returning the funds to the employees in wages.

Businesses are making the smartest decisions to pay the least tax. The same as every non business person on the planet does ( or should do )

If it made more tax sense to pay your employees (cost for the business) as opposed to other options they would.

This is wrong though

It's not the biggest problem with the tax system, and corporate management / ownership groups aren't taking money they otherwise would have given to employees, but they just had to keep the money away from the government. They are just taking the most money possible.

As I said, the only thing that could drive trickle down is wage inflation outstripping goods inflation, because productive output goes up, you can sell more for the same price, and employees are valuable because the total numbers of hours worked are constant across the economy. (which is something of a pipe dream, in a limited world).

[Jason14h]

Originally Posted by peter12

We should be far more concerned with streamlining our regulatory processes than reducing taxes.

For example, access to housing is one of the biggest drivers of inequality in this country and it has almost nothing to do with taxation. The issue is centred around how difficult it is to build enough housing supply to meet demand.

And the fact Canada’s entire economy is based on laundering money out of Asia and creating equity through housing

It isn’t completely a supply and demand issue - per se - if an unlimited amount of capital is looking to hide in your country in the form of real estate

Your solution would see housing prices drop ( in theory ) meaning that owning a home wouldn’t contribute to the inequality , meaning the spread would get closer for the middle and lower class, and widen between the current home owning middle class and the upper class / upper upper class

[afc wimbledon]

Originally Posted by Jason14h

And the fact Canada’s entire economy is based on laundering money out of Asia and creating equity through housing

It isn’t completely a supply and demand issue - per se - if an unlimited amount of capital is looking to hide in your country in the form of real estate

Your solution would see housing prices drop ( in theory ) meaning that owning a home wouldn’t contribute to the inequality , meaning the spread would get closer for the middle and lower class, and widen between the current home owning middle class and the upper class / upper upper class

In fairness this is British Columbia's entire economy, the rest of Canada does other things, no one in Shanghai is buying a condo in Prince Albert

[blankall]

Originally Posted by New Era

Examples please.

There are many examples where countries have drastically increased the livelihood of their citizens by giving tax breaks to corporations, encouraging corporation to move into their countries. Ireland is a great example. The movie industry in BC. The Isle of Man has one of the highest per capita GDPs and virtually non-existent poverty.

[afc wimbledon]

Originally Posted by blankall

There are many examples where countries have drastically increased the livelihood of their citizens by giving tax breaks to corporations, encouraging corporation to move into their countries. Ireland is a great example. The movie industry in BC. The Isle of Man has one of the highest per capita GDPs and virtually non-existent poverty.

Attracting outside activity by providing a reduced tax break that is rapidly copied by other countries isnt stimulating growth though, it is just stealing it from other countries and it will generally get stolen back a year or so later, massive corporations may use Ireland or the Isle of Mann as their 'headquarters' but they dont actually employ anyone or do business there, its just a mail box they use to eff over the rest of us by not paying taxes here in fact most tax havens are for the locals poverty stricken crap holes

[iggy_oi]

Originally Posted by Jason14h

I was making a statement that the biggest issue with trickle down economics is the current tax structures for corporations and the leadership of said companies actually encourages hoarding cash and share buybacks instead of returning the funds to the employees in wages.

And I’m responding to your statement/argument of whatever else you may want to label it as by calling BS. The tax structure has no impact on the employer’s decision to keep more money to themselves.

Businesses are making the smartest decisions to pay the least tax. The same as every non business person on the planet does ( or should do )

By your logic it would also be the smartest decision to pay their employees the least as well. See how it has nothing to do with the tax structure?

If it made more tax sense to pay your employees a higher wage (cost for the business) as opposed to other options they would. However , then as a country you wouldn’t be competitive to attract companies and they can operate on other places cheaper. - and most employees would rather receive stock and see buybacks for cheaper tax rates vs a flat wage increase if they were smart.

Business owners have been making similar arguments since before slavery was outlawed.

Your comment about the majority of employees preferring to receive stock and buybacks in exchange for keeping corporate taxes and their wages lower is in my opinion asinine given the fact that you’re suggesting they would prefer lower wages in exchange for something that the majority of workers don’t receive anyways.

And sure companies could just increase their costs for no reason other then altruism, and then they go broke and have no employees !

Really? You think a company like amazon would go broke if they paid their employees 5% more? I don’t agree with that at all but I’ll gladly hear your argument.

I’d argue the increase in pay would have a much higher probability of trickling down into the hands of others because lower to middle class working people tend to spend their money rather than hoard it. This would lead to busier businesses needing to hire more people or risk losing out on the additional business because they can’t service their expanding customer base. A tax break on the other hand only guarantees that the owner of the business will get to keep more of their profit, so it really only trickles up.

Tax cuts are usually to entice companies to operate in your country and invest their capital in your country. So while it may not trickle down and actually increase wages, the other option is no company in your country , no wages, and higher unemployment.

Tax rates are one of many factors that determines whether or not a market is suitable for investment. Trickle down economics like any good lie uses a little bit of truth and plausibility to make people believe it, in this case trying to convince working people that they stand to gain from giving more money to the people who are already running profitable businesses while trying to pay them as little as possible.