Does "Trickle down economics" work?

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Does "Trickle down economics" work?

I'm not au fait with economic paradigms but based on what I have heard, there is little benefit in giving large corporations major tax reductions a la Trump.

Australia is considering this also to boost the economy.
It makes more sense to me to super-charge low to middle-income individuals and small business to vitalise the retail industry via disposable income, for example.

Trickle-down economics is like the poor folk receiving the scraps (the “trickle”) from the rich folks’ meals like dogs.

Yeah, no thanks.

We here in Australia have a TV program called: "Planet America".
They are part of the left-leaning ABC network, but facts are facts.
However, "Alternative facts" need to be considered also. <chuckle>

They presented statistics and graphs which seemed compelling.
But could this be a case of: "Lies, damn lies and statistics"?
Possibly but I tend to believe what was said, largely due to my knowledge of human psychology.
Isn't "profits before people" the catch-phrase of large corporations?
Psychopathy is an integral element in big business, after all. <shrug>

Don't confuse psycopathy with sociopathy. Most psychopaths are incapable of functioning in the corporate world.

In general, low income people do not pay taxes and many times there are so many loopholes in the tax code that the rich avoid paying high taxes. It is the middle class that is most affected. When higher taxes are proposed for the rich, it translates into higher taxes for the middle class. Which pushes the middle class down producing a society with only low income and very high income individuals. And this approach destroys the will to innovate.

So in my humble opinion, trickle down economics worked when implemented by Ronald Reagan and Donald Trump. Whereas raising taxes only crashes the economy.

You do know that Ronald Reagan is the one who screwed our economy over with NAFTA in the first place, right?

Bill Clinton created NAFTA.

Clinton signs NAFTA into law, Dec. 8, 1993
https://www.politico.com/story/2018/12/ ... 93-1040789

Reagan deserves most of the credit for that mess seeing how it was all originally his idea.

https://www.heritage.org/trade/commenta ... th-america

According to "Planet America", cutting the tax rate for the rich has done bugger-all for the low to middle-income workers while the loss of tax revenue has caused a spike in the American deficit.
The stats/graphs are suggesting the American fiscal situation will be hit hard down the track, and if so, most Amerikans will be hit hard also when/if the scheisse hits the fan.

BTW, I am very much in favour of a strong America.
I am taking an impartial position here and have no agenda to push.

The Oracle of Truth signing off.

Don't believe everything you read ESPECIALLY on wikipedia. They're really referring to SOCIOPATHS who are attracted to those jobs. There is a difference.

But then again I'm no psychiatrist and the fact is that very little research has been done on psychopaths, sociopaths, and narcissists. It's like the so-called 'experts' either lump them all together or make absurd claims about the conditions.

Most real doctors will not actually diagnose a person with any of these conditions because all three are considered incurable and untreatable and they will be unable to profit off of their patients, so they write their problems off as something else like "depression" or a "personality disorder" so that they can keep making money.

Asking whether trickle down economics works is a bit like asking whether eating works. On one level, obviously it does... but then the question is what constitutes "working"? What situation are you in and where are you trying to get to? Eating cures starvation, and eating the right thing cures malnutrition, but eating poison will kill you.

I don't claim to have all the answers but there are certainly situations where cutting taxes stimulates economic growth, and economic growth nearly always benefits the poor. However, cutting taxes from the levels seen in modern industrialised nations will not pay for itself, as some libertarian economists may maintain.

Pepe raises two specifics in his OP:

This is not a simple question.

First off, we need to determine the incidence of the tax. Who is actually bearing the burden? For example, inheritance tax (or estate tax) is technically "paid" by the person who dies, but the people who inherit are the ones who are worse off. Import tariffs are the same - yes, it's the company that pays, but a very large proportion of that cost is passed onto the domestic consumer.

Determining the incidence of corporation tax is very hard. Estimates range from 20% to 80% being borne by employees. I believe that there is generally a consensus that it is a little over 50%, but I am not in a position to evaluate that.

If 80% of corporation tax effectively comes out of wages then cutting corporation tax would seem like a very effective way to create jobs and put money in people's pockets. Again it probably wouldn't pay for itself, but it could be a sensible move in times of recession.

Then we have to consider the competitiveness of the economy. If corporation tax is high then corporations are unlikely to want to be based there, although whether this actually impacts upon the economy depends on a range of factors and so there may be situations where governments can adjust taxes without affecting their attractiveness. I think Australia is probably relatively unlikely to benefit from tax cuts in this way as geography and a high cost of living (and corresponding high wages) make it difficult to compete with the US, EU, and China.

On one hand, it is obvious that cutting income taxes will mean that people have more money in their pockets - assuming they were paying tax to begin with.

Whether this would translate to a wider economic benefit, again, depends on the economic conditions.

One thing to bear in mind is that income tax is usually a government's primary source of income. If you cut it then you have to be prepared for a drop in revenues.

However, the moral case against excessively taxing the poor is very strong.


My understanding is that "sociopath" and "psychopath" are entirely interchangable terms.

Do you have a reason to think that experts are wrong to lump them together?