A question

[Neil Peart]

When people talk about "trickle-down economics," what exactly do they mean? I've got a pretty good idea of what they're talking about, but what exactly is it? I'm pretty sure it's a term invented by the left to promote socialism, but I need to be sure. Can someone explain this?

[DesertFox]

On the contrary. Trickle-down means economic benefits start at the top with the rich and trickle down to the peons below. The rich get theirs first and then the poor get theirs.

It's a silly notion, as Thomas Sowell has demonstrated. Whenever somebody such as Walmart builds a new store, the rich (the owners) are the LAST to begin getting paid. The first to get paid are the real estate guys. Then come the construction folks. Next are the management types and all the suppliers. Then come the worker bees.

After all that, and everything's up and running, the investors (the rich) get some return on their money.

[jayson]

TD-econ is one of those economic theories that rarely ever comes into play in a capitalist society. However, that doesn't mean some microcosms within the economy don't use it. The only time I can think of when trickle-down economics is applied in real-world is when the government is involved.

For example, education. Folks (mostly liberals) insist on spending as much money as possible towards education. Some even advocate spending more than our defense budget annually on education. The problem is that the bureaucracy involved between the paycheck and the students is massive. That's why teachers keep bitching for more funding, yet they never receive it when we spend more. Hence they bitch more to receive more. It's quite a vicious cycle.

Fact is, the money is lost at some point between point A and B. The schools end up with just enough to operate while the administration siphons it all off. It should tell you something when the superintendent of each school district in CA (numbers around 50 if i recall correctly, it's been awhile) is making almost half of what the President makes a year. That is, between $150,000 to $200,000 per year.

This is also a position that receives regular salary increases due to "cost of living", though the increases are usually far greater than the actual cost of living increase.

Anyways, does that explain it a little better? Sorry for heading off on a tangent there.

[Naturalized-Texan]

The term "trickle-down" was used derisively by the libs to describe President Reagan's supply-side, pro-growth tax rate cuts since the largest tax cuts were enjoyed by the wealthy. However, the wealthy took advantage the lower tax burden on their increased income to invest the money they saved from the lower tax rates to expand the economy and create jobs triggering the huge Reagan Boom the effects of which we are still experiencing.

When faced with the Clinton Recession that he inherited, President Bush also implemented similar supply-side, pro-growth tax rate cuts to produce the current economic boom.

EDIT: FYI, the first phase of the Reagan tax rate cuts lowered the top marginal rate from about 70% to 50% and the top marginal rate was eventually lowered to 28%.

[PrezLeefun]

I'd like to know how we are having an economic boom....

[Naturalized-Texan]

I'd like to know how we are having an economic boom....
C'mon. You know very well, or you certainly should know from information I have posted here, that we have had 75 consecutive months of unprecedented economic growth, that we are experiencing a period of full employment, that real wages are increasing, that more than 12.5 million jobs have been created since the end of the Clinton Recession, that inflation is relatively low, etc., etc.

[PrezLeefun]

I have not seen such benefits at all. Quite the opposite from everyone I know.

[DesertFox]

Prez, you and prolly most a your friends are college kids. You're not in the "real" economy of the professions and/or trades.

[PrezLeefun]

I am not talking about my college friends.... I am talking about working adults in my life.

[Lubbock]

When I think of trickle down economics, I always think of the Yacht builder in Florida who employed a sizeable number of people in his business, as well as supported numerous other segments of industry: timber, textiles, electronics, to name a few.

The federal government taxed the "wealthy," and taxed and taxed and taxed, until no one could afford to buy a yacht and the yacht builder went out of business.

"Class Warfare" --which is Lib stock-and-trade: if everyone can't have a yach, then no one should have a yacht.

There were a lot of people who worked for the yacht builder who were never going to own a yacht, but they made a nice living building boats for people who could afford them.

Trickle down economics.

[Naturalized-Texan]

When I think of trickle down economics, I always think of the Yacht builder in Florida who employed a sizeable number of people in his business, as well as supported numerous other segments of industry: timber, textiles, electronics, to name a few.

The federal government taxed the "wealthy," and taxed and taxed and taxed, until no one could afford to buy a yacht and the yacht builder went out of business.

"Class Warfare" --which is Lib stock-and-trade: if everyone can't have a yach, then no one should have a yacht.

There were a lot of people who worked for the yacht builder who were never going to own a yacht, but they made a nice living building boats for people who could afford them.

Trickle down economics.
Yeah, that was when Clinton enacted a huge luxury tax on yachts, etc. Congress quickly repealed that tax after stories like that came to light.

[DesertFox]

I remember that. The lack of yachts didn't hurt the wealthy at all. They just went and bought another jet or two. Or went to Bali and had a yacht made there. The ones hurt by the Clinton tax were the yacht builders.

[Timberwolf]

The term "trickle-down" was used derisively by the libs to describe President Reagan's supply-side, pro-growth tax rate cuts since the largest tax cuts were enjoyed by the wealthy. However, the wealthy took advantage the lower tax burden on their increased income to invest the money they saved from the lower tax rates to expand the economy and create jobs triggering the huge Reagan Boom the effects of which we are still experiencing.

When faced with the Clinton Recession that he inherited, President Bush also implemented similar supply-side, pro-growth tax rate cuts to produce the current economic boom.

EDIT: FYI, the first phase of the Reagan tax rate cuts lowered the top marginal rate from about 70% to 50% and the top marginal rate was eventually lowered to 28%.
Good info there, Tex...another thing is "tax cuts" is a false premise (I realize you said "tax rate cuts"...just clarifying things a bit). What is cut are the MARGINAL tax RATES. It has been shown throughout our history, whenever the tax rates are lowered, revenues increase (at what must be an alarming rate, to liberals).

One more thing Reagan did was cut the Capital Gains tax rate from 28% to 20% in his first year in office. By the end of his first term, CG collections had risen from $11 billion to over $44 billion. By cutting the marginal rate by 25+%, the Treasury collected 400% more revenue.

[TheIrishman]

Good info there, Tex...another thing is "tax cuts" is a false premise (I realize you said "tax rate cuts"...just clarifying things a bit). What is cut are the MARGINAL tax RATES. It has been shown throughout our history, whenever the tax rates are lowered, revenues increase (at what must be an alarming rate, to liberals).

One more thing Reagan did was cut the Capital Gains tax rate from 28% to 20% in his first year in office. By the end of his first term, CG collections had risen from $11 billion to over $44 billion. By cutting the marginal rate by 25+%, the Treasury collected 400% more revenue.


Which means they must have been cheating on their returns before. Had they paid the tax actually owed before the cuts it would have been about 90 billion??:question:

[Naturalized-Texan]

Which means they must have been cheating on their returns before. Had they paid the tax actually owed before the cuts it would have been about 90 billion??:question:
No, the cuts in the capital gains rate encouraged more trading volume resulting in more capital gains being realized and more taxes being paid.

The same thing happened in the late 1990s when the Republicans again cut the capital gains tax rate. The result then was huge increases in tax revenue that gave us the balanced budgets of the late 1990s.

[Bluemoon_Rising]

Also the Republicans stopped Clinton again and again from expanding the government in the way he wanted, held down spending that an otherwise Democratic congress would have increased dramatically.

Clinton takes credit for things he never intended to actually support -- free trade, welfare reform, the balanced budget -- until as a fiat accompli it was shoved down his throat by Republicans.

Because of that idiot Perot, Clinton is the accidental president who accidentally fell ass backwards into a portion of an historically unprecedented economic boom of some 26 years now begun by Reagan‘s dramatic cuts in marginal rates.

While the leftist elite do in fact understand the relationship between economic growth (increased investment and the expansion of the economic base) and increased revenues at the lower rates which fuel the growth, they encourage their base not to. The average Democrat's understanding of things goes like this: increase taxes and you increase revenues.

They're dolts.

I'm not altogether certain a reeducation program wouldn't benefit the country in the long run should the Democrats hold both the White House and Congress for eight years. Of course, we'd have to dig the country back out of the Keynesian hole once again.

[Naturalized-Texan]

People also forget that the Republican Congress unanimously defeated Clinton's FY 1996 Budget that projected $200 billion deficits as far as the eye could see and replaced it with a budget that reduced Clinton's spending projections by $1 trillion over 5 years.