By using this site, you agree to our Privacy Policy and our Terms of Use. Close

General - National Debt - View Post

mirgro on 14 March 2010
Edit Thread
Kasz216 said:

And in turn.. the money will end up with the poor anyhow... through the investments... it's just it will effect the economy positivly more quickly.

Also, less taxes are being collected either way... the difference is... the real poor get helped sooner by the GDP growth quicker.

 

Let me set up a quick hypothetical to drive home the point.

 

January Earth A - The rich Get a tax cut... the rich start investing.   Unemployed/Underemployed beneits are cut.

January Earth B - The poor get a tax cut... the poor start buying.  Unemployed/underemployed benefits are cut.


March Earth A - The investments take hold.  The Unemployed/Underemployed numbers shrink.  The base of people being taxed grows as the poor taxed growns.  Now only do the poor taxed grow but so do middle level management positions.  Not only are less people poor, but more people are paying income, sales and federal taxes.  So your making back that money you lose in taxes.  The GDP grows say... 10%

March Earth B - The money is reaching the hands of the rich... who start investing it.

July Earth A - The money is reaching the poor start buying. 

July Earth B - The investments take hold.  The Unemployed/Underemployed numbers shrink.  The base of people being taxed grows as the poor taxed growns.  Now only do the poor taxed grow but so do middle level management positions.  Not only are less people poor, but more people are paying income, sales and federal taxes.  So your making back that money you lose in taxes.  The GDP grows say... 10%/.

 

Now if we expand this out forever... Earth B's GDP is going to constantly be behind Earth A's GDP... including per captia.


EVERYONE in earth A is better off then Earth B... INCLUDING the poor who would of gotten the tax cuts because in the long run the GDP growth likely outweighs the short small term gain.

I fully understand what you are saying. I gues it just comes down to priorities. However there is one more thing.  Whoever doesn't get a tax cut will be burdened even more with taking care of social programs. By cutting taxes of the rich, the disparity between the rich and poor only grows, by doing the poor first that disparity shrinks some.