Quote:
Originally Posted by Ducimus
I have to admit, i don't see how trickle down works. Not when your 401K match is stopped. You recieve no more raises, no more bonuses, no more nothing. Meanwhile, the big exec types are rolling in clover. Explain that trickle down to me again? Oh right.. i should be grateful im employed at all. I could be in a cardboard box.
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That's the whole point. Proponents say that giving financial incentives to the highest earners are supposed to somehow help out everyone.
If you take money away from someone (i.e. higher taxes) they work harder to replace it. Trickle down economics also relies on the idea that wages have a direct correlation to hours worked - which is not true. Wages are inelastic to hours worked. The majority of people work salaried jobs where their hours are set. A change in wages are not going to equate into a change in hours worked.
Trickle down proponents also say that inequality is supposed to motivate lower earners to work harder to bridge the gap - that doesn't happen. Studies have shown that higher rates of income inequality lead to lower growth rates. Indeed, it's been found that higher equality leads to higher growth rates:
http://www.dallasfed.org/research/ec...08/el0801.html
Not to metion that any metric of tax rates, both top marginal and effective (lord knows tater and I have gone round and round about that) do not have any measurable or meaningful correlation to any generally accepted metric of economic prosperity (GDP, wage growth or employment). If you want to weasel around that and use your own strange metric where tax rates do show a correlation, know that it doesn't hold water according to meaningful economic theory.
Trickle down theory fails in terms of both empirical and historical evidence, along with generally accepted economic theory.