steven787 said:
You could also argue if the bottom half gets more money to spend, they will spend it; creating demand for goods and services (which is part of GDP, financial investment is not), which creates jobs and increases profits, making stocks more attractive to investors who will sell off gold, foreign bonds and foreign currencies to buy stocks, which means more money for capital(K capital as in means of production, not dollar capital) When you encourage stock purchases with lower taxes on higher incomes and investment income, you just create artificially high demand for stocks which creates a bubble that bursts the moment the market shows signs of trouble... like now. |
The problem with the "Trickle-Up" model is it negates the fact that the people who earn more income generally have more ability to increase their income, typically at the expense of lower (in real terms) income for their employees or higher prices for their customers.
Edit: In other words, like any other cost they take on, wealthy people and corporations do not "eat" the cost of taxes they pass that onto someone else.
The truth is the Trickle Down theory works but not in the way that people want it to ... When you keep taxes (in general) low and let businesses and individuals grow the ecconomy everyone is far better off; the problem is that people don't notice how wealthy they are (primarly) because they compare their wealth next to someone else at the exact same point in history. If you go back 25 or 50 years and compare yourself to someone who was in the same financial position as you are, you will find that you are dramatically "Wealthier" than they were ...
