| Mr Khan said:
Part of it is psychological, to be certain. Stricter terms on dispensation of stimulus money would start (e.g. companies that receive money have to either plow it back into investment in the company or spend it on sub-VP level employees, and absolutely cannot just take that, make fat CEO cash bonuses, and continue laying people off) The only way trickle-down theory can ever come close to working is if the rich are forced to act responsibly. Some sort of universal salary cap could help there, forcing them at least to get a certain proportion of income from investment if they want to make more than that |
While I'm not going to argue for trickle down economics at the moment, progressive taxation systems and subsidies to low income earners tend to act as a disincentive to paying employees "fair" wages ...
To understand, just consider that to increase a person's real income (di) by a certain value (x) you will need to compensate for the higher taxes you will pay (t) and the reduction in subsidies (s) ... This leaves us with an equation di=x-(t+s) ... The more subsidies you introduce, and the more pronounced your progressive tax system is, the larger the cost is on a business to increase the standard of living of their employee by the same amount.
