Iceweasel
Diamond Member
Source?1985There's no such thing as trickle down. Supply side works, when was it abandoned?
While liberals scream "Trickle down economics didn't work", the facts tell a different story
- Thread starter Little-Acorn
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Iceweasel
Diamond Member
LOL (I mean it). What a CHILDISH interpretation. Capitalism is what made this country great and socialism is why we are floundering. You must live off of a pension so you can sit there and dream, for those in the trenches it isn't so theoretical.
Capitalism works best in a free market, letting the marketplace fine tune it. Socialism seeks to define the marketplace from top down bureaucrats. Most of whom have zero business acumen. The more people like you in office the worse it gets and it's high time we clean out the barn.
Hutch Starskey
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Of course. When the gains only go to the top, that cash gets removed from circulation in the economy and stays tied up in investment accounts. If the bulk of consumers saw those gains, the money would be spent and circulate through the economy creating growth and demand.
Hutch Starskey
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I haven't read anything other than the title of this thread.
As goes "trickle down" economics, the fact is that like Thomas Sowell, I'm not aware of there being any such actual theory in economics, let alone an economist who has advocated such a thing.
Some years ago, in my syndicated column, I challenged anyone to name any economist, of any school of thought, who had actually advocated a “trickle down” theory. No one quoted any economist, politician or person in any other walk of life who had ever advocated such a theory, even though many readers named someone who claimed that someone else had advocated it, without being able to quote anything actually said by that someone else.Yet, the idea of trickle down economics must come from somewhere, and we know that millions of people are aware of the term -- if not the economics of it -- from a source other than the traditional sources of information for which we cannot produce any empirically testable evidence for it's being know of and believed in: the Bible, Quran, and other scriptural sources. Well, the answer is that the term -- which names the idea that tax cuts and other financial incentives for companies and individuals in the upper tiers of society fuel growth that indirectly benefits everyone, no matter whether he own a mansion or mud hut -- comes from Will Rogers. He once remarked that the Hoover Administration, via tax cuts, was handing out money to the rich in hopes that it would eventually “trickle down to the needy.”
-- Thomas Sowell, "Trickle Down” Theory and “Tax Cuts for the Rich”
Well, that sounds pretty plausible, and basically like a good thing, right? We all surely recognize that cutting everyone's taxes is at least to some degree a good thing for, well, everyone. So what's the problem with "trickle down," or what might be more aptly called "supply side economics" (SSE -- here's a video that explains it in very simple terms), which, frankly, is so "new" that it dates to the 18th century? Well, the answer depends in large measure on three elements:
So let's look at these dimensions.
- the factors of production and their relative roles within an economy,
- the state of income inequality, and
- the difference between before and after cut tax rates.
Factors of Production
Land, labor, capital and entrepreneurship are the factors of production. Suppliers use each in varying degrees to produce the stuff they sell. For supply side initiatives to work, producers must hire workers and pay them a reasonably decent wage at the time of the cuts and hirings. In order for that to happen, at least one of the following must be true:
Income Inequality:
- Production land, labor, entrepreneurship and/or capital:
- Production capacity is materially below the profit maximizing level (PML)** of productivity/production and the society has enough workers with the requisite skills to meet the demand for labor given my maximum (or nearly so) productivity output. How material? Material enough to drive unemployment so that structural levels of unemployment are reached at PML production quantities. This state, as a starting point, produces a rapid boost quite soon after the starting point.
What happens at that point? Everyone who wants to work is working (or will be "tomorrow") at a wage they and employers find acceptable and producers are producing all they can without each marginal unit produced "eating" into their profits. This state can be achieved by SSE tax cuts when, among other things, there is a significant rate of unemployment (8% or more) among adequately skilled workers.
- Production capacity is below PML, but demand vastly outstrips supply. In this situation, the process described above happens again, but only after suppliers have adjusted -- invested in "something" -- so that they can achieve PML at a higher overall quantity of goods produced in order to meet the demand for them. It takes longer for the supply side benefits to kick in when this state is the economy's starting point.
- The labor that exists to be hired (above) will be hired (and retained) rather than not hired because there exists capital that can replace labor more efficiently and effectively. It's pretty easy to understand why and under what circumstance(s) capitalists will engage labor instead of investing in capital; it's a very straight forward cost-benefit decision. When you get farther along in this post, you'll see why this is super important to the efficacy and prospect for success of supply side economics.
- Capital can be purchased so as to allow capitalists to obtain their desired rate of return. This factor drives entrepreneurship (expansion and new) as well as labor and capital purchases.
Looking at Trump's current tax cutting proposals, one cursorily senses from the way his proposal is discussed that at least the proportionality of the cuts would be comparable across all incomes. The fact is, however, that is not that. Trump doesn't propose cut all rates by a given percent. Here's what he proposes.
Now here're a few things to keep in mind from an equality standpoint if one is evaluating the Trump personal income tax proposal. Keep in mind that if you itemize, marginal tax rates don't me a damn thing; if you do not itemize, marginal rates are relevant. What's it take to itemize? For the average American, home ownership is what makes it worth itemizing rather than using the standard deduction. (Approximately 63% of Americans own their home.)
Brackets & Marginal Tax Rates for Married-Joint filers (Brackets for single filers are ½ of these amounts):
- Less than $75,000 12%
- More than $75,000 but less than $225,000 25%
- More than $225,000 33%
Marginal and Effective Tax Rate Impact:
- What is your effective (not marginal) tax rate now? I suspect that it's essentially what he's proposing. I know my marginal rate is higher than his proposed marginal rates, but my effective rate is just a bit shy of what he's proposed for the middle group. So, were I a wage/salaried worker, unless he trashes a bunch of the reductions for which I am eligible, and from what I can tell he's not, my effective tax rate seemingly won't change materially, even though the marginal rate to which I'd ostensibly be subject (the rate applicable to my gross income) is lower. But there's a catch, which I'll discuss a bit later.
To understand what I'm talking about, take a look at what are the current average effective tax rates paid by most folks.
Click on the image to view tables that will show you the average earnings of the folks in each group pictured above. The figures are from 2012, so they will be slightly different for 2015 and 2016, but I think they are close enough for you to get a decent enough sense of what I'm talking about, and unless one is right at the upper or lower ends of a bracket, one is likely in the same bracket now as one was in 2012.
- You'll note (if you clicked on the link) that he'd cap itemized deductions at $200K. What's the impact of that? Folks with predominantly wage and non-business and non-investment income will pay more in federal income tax. Folks with lots of business income and/or investment income either won't see much change at all or they'll realize far lower tax liabilities. Who is that? Doctors, attorneys, investment bankers, C-level and and other senior executive corporate employees (most of these folks greatest compensation comes from stock transactions -- capital gains -- not wages), pretty much anyone who earns their income via a partnership or S Corp. (If you don't understand pass through income, click on the link.)
Consider the example of a married couple whose taxable income (after deductions and exemptions currently is $225K -- very solidly a (upper) middle class couple, but not rich by any stretch of the imagination -- for 2016. What would they pay?
-- Currently, they'd pay at 28%
-- Under the Trump plan, they'd pay at 33%. That's a 5% Trump-tax increase!
That's an $11,250 increase in their tax bill. I suspect for most folks in that income range, that's about two or three mortgage payments. So, you tell me. Do you think that sum won't be seriously missed by a couple earning $225? I'll tell you that it without question would be.
Look back at the chart above. What is the effective tax rate paid by couples who have about $40K/year in taxable income? If you clicked on the chart and looked at Table 7, you'd find that puts a $40K/year (after deductions, exemptions and credits) earner in the top 25% and they currently pay at an effective tax rate of ~7.25 to ~10% even though their marginal rate is 15% and Trump offers a 12% marginal rate.
Now here's the catch for modest earners....If that couple's deduction profile (the deductions they are eligible to take and do take) is no different than it is under the current tax plan -- and those are details we have not been given -- all that'll change is their marginal rate -- the starting rate before deductions, credits and exemptions are calculated, not the actual rate at which they'll pay taxes.
- The Inequity "Catch" that Benefits High Income Folks:
Remember the catch I mentioned earlier? Let's now look at doctors, attorneys, accountants, architects, engineering partners, advertising firm partners, many management consultants, pretty much anyone who's self-employed and doing well -- folks in the ~$400K+ per year range. Since their earned income from practicing medicine will likely flow to them via a pass through entity, that is, an S Corp, LLC or partnership, their earnings received that way will be taxed at...wait for it...15%!
That's not the end of it. Ostensibly, Trump's tax plan appears to have a vendetta to bring against hedge fund and private equity fund managers for he proposes eliminating the carried-interest (interest as in "stake," not interest on money) preference and taxing that kind of income at the ordinary income rate of 33% instead of the current 20%.
That sounds good, but there's a detail that's been left unclarified. What do you think that is? It's that private equity firms and hedge funds are often pass through entities, and Trump's plan is silent on whether that form of business organization would be denied to the partners of such entities. I happen to think that there is no way the folks who are among the richest of the rich are going to let Congress pass legislation that denies them access to the pass through entity provision I just discussed above and foists upon them a 13% marginal tax rate increase that they'll have to work all the harder to deduct down to whatever single-digit to low-teen rates they pay at today. That said, there are still ways around it, not the least of which is to take advantage of the "10% repatriation" provision Trump has proposed. (Note: Either of the last two strategies I mentioned require setting up shell companies -- a la Apple, Google and others -- that exist in name only.)
I pretty much illustrated this aspect as part of the "inequity" discussion, so If you read the preceding section, you know what this is. If you didn't read it, scroll up and read it.
Connecting the Dots:
So with the foregoing concepts and tactics understood, what must one do to figure out the efficacy of supply side economics for oneself and then for the nation?
- Macroeconomically:
- Ask yourself whether the conditions that militate for supply side's positive impact on GDP (aggregate demand) are such that supply side policy work as nicely as it did (nearly so, not quite as well, nowhere near as well, etc.) under Reagan. I happen to think they are not. Why? Because in the early 1980s, the U.S. had just passed the zenith of labor-intensive manufacturing. Factories still needed scores of people. Today, in the aftermath of the digital revolution, regardless of where a factory is, it will not require anywhere near the quantities of workers that were needed in the 1980s. Factory automation technology is now smarter, faster, more maintenance free, etc.
Looking at the chart above, one can see what labor utilization was when, according to Trump, "America was great" and what it is now. With even just the near term capabilities of automation, do you really think manufacturers are going to ever return to the 1970s, or even 1980s levels of employment? I for one am not that naive.
Here are some videos that'll give you a sense of just how automated factories are.
Wood stacking:
Sorting and packaging:
Stacking pancakes
A FANUC machine with a huge array of embedded tools used for a complex assembly process:
Mitsubishi Auto Assembly
Hopefully you watched the video here. If you did and you watched those videos above, you should understand why the supply side tax cuts won't do much for anyone who is an lowly or unskilled worker. Essentially, it's just going to be the next nail in the coffin of "unspectacular" (not meant derisively) workers, that is, folks who have only (mostly) physical skills to offer employers. The most likely reality is that the tax cuts will inspire companies to invest in new equipment, but "you" won't be among the folks who build that equipment unless you are highly skilled/educated and a "mind" worker rather than a "body" worker. I find it nigh impossible to believe that supply side policy will, this time round, stimulate consumption as it did in the 1980s, yet if it's to "work," that's what it must do.- Microeconomically
- After considering the macroeconomic situation, ask yourself where your employer will fit into that picture.
- Now ask yourself where you see yourself (or your kids) fitting into that picture given the macro and micro econ landscape.
- Now ask yourself where you see most other folks, "the middle class," if you will, fitting into the picture.
- Equity and Equality:
- Here, just think about the tax cuts being proposed and ask yourself if you think it'll work out so that it's fair to you and folks like you. I'll tell you now that if you think it'll work out well for for the average American on this basis, you're more optimistic about their future than I am about their future.
I hope I'm wrong and you're not, but I'm one of the folks who'll benefit from the pass-through provisions, and I'm not one of the folks who feels like s/he has no voice in the political process. I just know that if I'm right, there will be a very damaging class war in this country. I don't want that to happen, and that has a lot to do with why I oppose the idea of implementing supply side policy at this point in our history. The supply side policy expectations among the masses are high and the "writing on the wall" does not suggest there's any rational reason for it. Let's be real here. Trump may become President, but he won't have the power of Louis XIV or Henry VIII.
**Note:
Sorry, but the PML idea requires calculus to fully understand, but if you took calculus, you'll likely "get it" -- most likely remember it for it's the classic "stuff" of calculus -- even if you didn't study economics. If you didn't take economics or calculus, the idea is this: maximum profit is earned at some level of production less than 100% capacity to produce, thus suppliers will not (rationally) opt to produce one more unit of "stuff" once they reach the profit maximum levels of production. There are a lot of potential detailed reasons why suppliers behave this way, but at the end of the day, it's because as capitalists, owners do not care to produce one more unit and make less profit on it than they did for the preceding unit.
Please remember, this is an economics, not marketing, discussion; thus pricing strategies and other marketing tactics, all of which are ways producers competitively attempt to manipulate basic economic principles to operate more in their favor than they would absent implementing any marketing tactics. Marketing comes into play the instant the setting moves to monopolistic competition from perfect competition, or, to put it in layman's terms, when "brand" is perceived to have value (factors into the elasticity coefficient) to either the buyer or seller.
- Perfect competition --> the market for men's blue shirts -- A blue shirt is a blue shirt so long as it fits and one is will and able to buy it. The decision process is governed by reason.
- Monopolistic competition --> the market for Polo and/or Armani men's blue shirts. -- A Polo or Armani shirt may be "worth more" than another shirt from the same maker or from a competing producer. Either way, emotion (to some degree) along with reason factor into the buying decision.
Yeah,I'm pretty sure no one read all of that.
Hutch Starskey
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Well it is called Table 678 after all.
RDD_1210
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No it won't. Stop pretending you have any clue what you're talking about.
edthecynic
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Except the curve on the graph does not match the data in the actual Table 678. Look at the bottom 20% in the actual Table 678, from 1980 to 1985 the income declined, but on the graph all incomes increase at least 5% through 1985.
The Professor
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I didn't catch that. Thanks.
RDD_1210
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This is why we want her to post the source for her chart, which she refuses to do. Because it didn't come from where the data supposedly came from.
Little-Acorn
Gold Member
- Thread starter
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How typical of liberals to compare data from two different time periods, and then whine at they don't match.
These people get quite silly when they are trying to avoid the truth.
edthecynic
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I compared the data from the ACTUAL Table 678, not your fictitious Table 678.How typical of liberals to compare data from two different time periods, and then whine at they don't match.
These people get quite silly when they are trying to avoid the truth.
320 Years of History
Gold Member
???
- Have you ever been to the PRC?
- Have you ever been inside a Chinese factory?
- Have you been at a Chinese manufacturer's "consolation" presentations delivered because a white collar worker jumped off a balcony, killing themselves, because the demands placed on white collar workers, not the factory workers, that are so great?
- Have you seen how Chinese manufacturers provide for their employees by creating entire towns -- ranging from basic services and goods providing businesses to entertainment of every sort, including what we'd consider the most sordid of sorts -- for the sole purpose of being able to locate their facilities literally in the middle of nowhere?
- Have you visited the homes of Chinese middle class workers -- factory workers and white collar workers -- and observed their lifestyle?
- Have you watched as literally hundreds of Chinese workers -- factory and office -- over the course of several months close out their affairs in the PRC, pick up their entire lives and move to Africa or South America because their company will begin new operations there and they want to be a part of that growth and reap the benefits of it?
- Have you walked through a Chinese city and observed the entrepreneurship
- Mom-and-pop apothecary, clothing shop, music and video store, tailor, or general goods shop such as one might find in any neighborhood?
- Restaurants ranging from a lo mein or chodofu cart on the sidewalk to gourmand eateries?
- Small tech goods manufacturing as one'd see on floor after floor of high rises in Hua Zhong Bei, Shenzhen?
- Villages like Dafen that are filled with nothing but independent artists?
- Have you had to learn how to negotiate and manage projects so as to be prepared for the fact that the client will at various points in the delivery process raise picayune complaints as a way to gain additional price concessions?
- Have you walked into a company's corporate headquarter offices and found that every single worker there, from the lowest clerk to the CEO has at least one master's degree and speaks three languages and has their degrees from the top Chinese, U.S. and Western European universities?
- Have you gotten a call at 1:00 a.m. from a senior or C-level member of a company who'd just finished reading the report your team submitted and they wanted to discuss it prior to the 8:00 a.m. meeting in which its recommendations would be considered and decided upon? And then sat there until 3:45 in the morning discussing it, during the course of which the other person conferenced in two of their colleagues?
- Have you had one of your Chinese senior managers arrive a three minutes late for a meeting with you because they were held up by an accident as they took their three year old to school, not nursery school, real school where the child is learning to read, write and add because the Chinese educational system expects five year olds to know about 500 "words" (characters)? That and have the person at several points over the next two days express remorse for being three minutes late, even though you didn't care, and told them so, that they were late at all?
- Have you learned Mandarin or Cantonese, thereby gaining a window onto the nature of the Chinese culture?
And, no, I'm not defending China's international politics. I'm saying that your remark reflects a provincial view of the place and a lack of understanding of what is going on in Chinese workplaces today. I'm not saying that the scenario you've described doesn't occur. I'm saying it's not the normal occurrence, in spite of what may appear on U.S. television and in U.S. newspapers. I'm saying that the Chinese work ethic is such that "working one's tail off" is the norm no matter what role an individual has.
I'm not defending China's governmental positions on human and worker rights. I'm saying that in many cases there's no need to because what the people there want and how they view work compared with/to what American workers demand simply aren't the same things, even though there is at times and in some dimensions some overlap. I'm saying that applying American paradigms and ideals regarding work simply does not work when the environment under discussion is the Chinese work environment because the cultural differences are too great for more than the most insular of cases to "translate" comparably.
RDD_1210
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I compared the data from the ACTUAL Table 678, not your fictitious Table 678.How typical of liberals to compare data from two different time periods, and then whine at they don't match.
These people get quite silly when they are trying to avoid the truth.
And they wonder why everyone refers to the republican base as the low-information voters.
320 Years of History
Gold Member
I haven't read anything other than the title of this thread.
As goes "trickle down" economics, the fact is that like Thomas Sowell, I'm not aware of there being any such actual theory in economics, let alone an economist who has advocated such a thing.
Some years ago, in my syndicated column, I challenged anyone to name any economist, of any school of thought, who had actually advocated a “trickle down” theory. No one quoted any economist, politician or person in any other walk of life who had ever advocated such a theory, even though many readers named someone who claimed that someone else had advocated it, without being able to quote anything actually said by that someone else.Yet, the idea of trickle down economics must come from somewhere, and we know that millions of people are aware of the term -- if not the economics of it -- from a source other than the traditional sources of information for which we cannot produce any empirically testable evidence for it's being know of and believed in: the Bible, Quran, and other scriptural sources. Well, the answer is that the term -- which names the idea that tax cuts and other financial incentives for companies and individuals in the upper tiers of society fuel growth that indirectly benefits everyone, no matter whether he own a mansion or mud hut -- comes from Will Rogers. He once remarked that the Hoover Administration, via tax cuts, was handing out money to the rich in hopes that it would eventually “trickle down to the needy.”
-- Thomas Sowell, "Trickle Down” Theory and “Tax Cuts for the Rich”
Well, that sounds pretty plausible, and basically like a good thing, right? We all surely recognize that cutting everyone's taxes is at least to some degree a good thing for, well, everyone. So what's the problem with "trickle down," or what might be more aptly called "supply side economics" (SSE -- here's a video that explains it in very simple terms), which, frankly, is so "new" that it dates to the 18th century? Well, the answer depends in large measure on three elements:
So let's look at these dimensions.
- the factors of production and their relative roles within an economy,
- the state of income inequality, and
- the difference between before and after cut tax rates.
Factors of Production
Land, labor, capital and entrepreneurship are the factors of production. Suppliers use each in varying degrees to produce the stuff they sell. For supply side initiatives to work, producers must hire workers and pay them a reasonably decent wage at the time of the cuts and hirings. In order for that to happen, at least one of the following must be true:
Income Inequality:
- Production land, labor, entrepreneurship and/or capital:
- Production capacity is materially below the profit maximizing level (PML)** of productivity/production and the society has enough workers with the requisite skills to meet the demand for labor given my maximum (or nearly so) productivity output. How material? Material enough to drive unemployment so that structural levels of unemployment are reached at PML production quantities. This state, as a starting point, produces a rapid boost quite soon after the starting point.
What happens at that point? Everyone who wants to work is working (or will be "tomorrow") at a wage they and employers find acceptable and producers are producing all they can without each marginal unit produced "eating" into their profits. This state can be achieved by SSE tax cuts when, among other things, there is a significant rate of unemployment (8% or more) among adequately skilled workers.
- Production capacity is below PML, but demand vastly outstrips supply. In this situation, the process described above happens again, but only after suppliers have adjusted -- invested in "something" -- so that they can achieve PML at a higher overall quantity of goods produced in order to meet the demand for them. It takes longer for the supply side benefits to kick in when this state is the economy's starting point.
- The labor that exists to be hired (above) will be hired (and retained) rather than not hired because there exists capital that can replace labor more efficiently and effectively. It's pretty easy to understand why and under what circumstance(s) capitalists will engage labor instead of investing in capital; it's a very straight forward cost-benefit decision. When you get farther along in this post, you'll see why this is super important to the efficacy and prospect for success of supply side economics.
- Capital can be purchased so as to allow capitalists to obtain their desired rate of return. This factor drives entrepreneurship (expansion and new) as well as labor and capital purchases.
Looking at Trump's current tax cutting proposals, one cursorily senses from the way his proposal is discussed that at least the proportionality of the cuts would be comparable across all incomes. The fact is, however, that is not that. Trump doesn't propose cut all rates by a given percent. Here's what he proposes.
Now here're a few things to keep in mind from an equality standpoint if one is evaluating the Trump personal income tax proposal. Keep in mind that if you itemize, marginal tax rates don't me a damn thing; if you do not itemize, marginal rates are relevant. What's it take to itemize? For the average American, home ownership is what makes it worth itemizing rather than using the standard deduction. (Approximately 63% of Americans own their home.)
Brackets & Marginal Tax Rates for Married-Joint filers (Brackets for single filers are ½ of these amounts):
- Less than $75,000 12%
- More than $75,000 but less than $225,000 25%
- More than $225,000 33%
Marginal and Effective Tax Rate Impact:
- What is your effective (not marginal) tax rate now? I suspect that it's essentially what he's proposing. I know my marginal rate is higher than his proposed marginal rates, but my effective rate is just a bit shy of what he's proposed for the middle group. So, were I a wage/salaried worker, unless he trashes a bunch of the reductions for which I am eligible, and from what I can tell he's not, my effective tax rate seemingly won't change materially, even though the marginal rate to which I'd ostensibly be subject (the rate applicable to my gross income) is lower. But there's a catch, which I'll discuss a bit later.
To understand what I'm talking about, take a look at what are the current average effective tax rates paid by most folks.
Click on the image to view tables that will show you the average earnings of the folks in each group pictured above. The figures are from 2012, so they will be slightly different for 2015 and 2016, but I think they are close enough for you to get a decent enough sense of what I'm talking about, and unless one is right at the upper or lower ends of a bracket, one is likely in the same bracket now as one was in 2012.
- You'll note (if you clicked on the link) that he'd cap itemized deductions at $200K. What's the impact of that? Folks with predominantly wage and non-business and non-investment income will pay more in federal income tax. Folks with lots of business income and/or investment income either won't see much change at all or they'll realize far lower tax liabilities. Who is that? Doctors, attorneys, investment bankers, C-level and and other senior executive corporate employees (most of these folks greatest compensation comes from stock transactions -- capital gains -- not wages), pretty much anyone who earns their income via a partnership or S Corp. (If you don't understand pass through income, click on the link.)
Consider the example of a married couple whose taxable income (after deductions and exemptions currently is $225K -- very solidly a (upper) middle class couple, but not rich by any stretch of the imagination -- for 2016. What would they pay?
-- Currently, they'd pay at 28%
-- Under the Trump plan, they'd pay at 33%. That's a 5% Trump-tax increase!
That's an $11,250 increase in their tax bill. I suspect for most folks in that income range, that's about two or three mortgage payments. So, you tell me. Do you think that sum won't be seriously missed by a couple earning $225? I'll tell you that it without question would be.
Look back at the chart above. What is the effective tax rate paid by couples who have about $40K/year in taxable income? If you clicked on the chart and looked at Table 7, you'd find that puts a $40K/year (after deductions, exemptions and credits) earner in the top 25% and they currently pay at an effective tax rate of ~7.25 to ~10% even though their marginal rate is 15% and Trump offers a 12% marginal rate.
Now here's the catch for modest earners....If that couple's deduction profile (the deductions they are eligible to take and do take) is no different than it is under the current tax plan -- and those are details we have not been given -- all that'll change is their marginal rate -- the starting rate before deductions, credits and exemptions are calculated, not the actual rate at which they'll pay taxes.
- The Inequity "Catch" that Benefits High Income Folks:
Remember the catch I mentioned earlier? Let's now look at doctors, attorneys, accountants, architects, engineering partners, advertising firm partners, many management consultants, pretty much anyone who's self-employed and doing well -- folks in the ~$400K+ per year range. Since their earned income from practicing medicine will likely flow to them via a pass through entity, that is, an S Corp, LLC or partnership, their earnings received that way will be taxed at...wait for it...15%!
That's not the end of it. Ostensibly, Trump's tax plan appears to have a vendetta to bring against hedge fund and private equity fund managers for he proposes eliminating the carried-interest (interest as in "stake," not interest on money) preference and taxing that kind of income at the ordinary income rate of 33% instead of the current 20%.
That sounds good, but there's a detail that's been left unclarified. What do you think that is? It's that private equity firms and hedge funds are often pass through entities, and Trump's plan is silent on whether that form of business organization would be denied to the partners of such entities. I happen to think that there is no way the folks who are among the richest of the rich are going to let Congress pass legislation that denies them access to the pass through entity provision I just discussed above and foists upon them a 13% marginal tax rate increase that they'll have to work all the harder to deduct down to whatever single-digit to low-teen rates they pay at today. That said, there are still ways around it, not the least of which is to take advantage of the "10% repatriation" provision Trump has proposed. (Note: Either of the last two strategies I mentioned require setting up shell companies -- a la Apple, Google and others -- that exist in name only.)
I pretty much illustrated this aspect as part of the "inequity" discussion, so If you read the preceding section, you know what this is. If you didn't read it, scroll up and read it.
Connecting the Dots:
So with the foregoing concepts and tactics understood, what must one do to figure out the efficacy of supply side economics for oneself and then for the nation?
- Macroeconomically:
- Ask yourself whether the conditions that militate for supply side's positive impact on GDP (aggregate demand) are such that supply side policy work as nicely as it did (nearly so, not quite as well, nowhere near as well, etc.) under Reagan. I happen to think they are not. Why? Because in the early 1980s, the U.S. had just passed the zenith of labor-intensive manufacturing. Factories still needed scores of people. Today, in the aftermath of the digital revolution, regardless of where a factory is, it will not require anywhere near the quantities of workers that were needed in the 1980s. Factory automation technology is now smarter, faster, more maintenance free, etc.
Looking at the chart above, one can see what labor utilization was when, according to Trump, "America was great" and what it is now. With even just the near term capabilities of automation, do you really think manufacturers are going to ever return to the 1970s, or even 1980s levels of employment? I for one am not that naive.
Here are some videos that'll give you a sense of just how automated factories are.
Wood stacking:
Sorting and packaging:
Stacking pancakes
A FANUC machine with a huge array of embedded tools used for a complex assembly process:
Mitsubishi Auto Assembly
Hopefully you watched the video here. If you did and you watched those videos above, you should understand why the supply side tax cuts won't do much for anyone who is an lowly or unskilled worker. Essentially, it's just going to be the next nail in the coffin of "unspectacular" (not meant derisively) workers, that is, folks who have only (mostly) physical skills to offer employers. The most likely reality is that the tax cuts will inspire companies to invest in new equipment, but "you" won't be among the folks who build that equipment unless you are highly skilled/educated and a "mind" worker rather than a "body" worker. I find it nigh impossible to believe that supply side policy will, this time round, stimulate consumption as it did in the 1980s, yet if it's to "work," that's what it must do.- Microeconomically
- After considering the macroeconomic situation, ask yourself where your employer will fit into that picture.
- Now ask yourself where you see yourself (or your kids) fitting into that picture given the macro and micro econ landscape.
- Now ask yourself where you see most other folks, "the middle class," if you will, fitting into the picture.
- Equity and Equality:
- Here, just think about the tax cuts being proposed and ask yourself if you think it'll work out so that it's fair to you and folks like you. I'll tell you now that if you think it'll work out well for for the average American on this basis, you're more optimistic about their future than I am about their future.
I hope I'm wrong and you're not, but I'm one of the folks who'll benefit from the pass-through provisions, and I'm not one of the folks who feels like s/he has no voice in the political process. I just know that if I'm right, there will be a very damaging class war in this country. I don't want that to happen, and that has a lot to do with why I oppose the idea of implementing supply side policy at this point in our history. The supply side policy expectations among the masses are high and the "writing on the wall" does not suggest there's any rational reason for it. Let's be real here. Trump may become President, but he won't have the power of Louis XIV or Henry VIII.
**Note:
Sorry, but the PML idea requires calculus to fully understand, but if you took calculus, you'll likely "get it" -- most likely remember it for it's the classic "stuff" of calculus -- even if you didn't study economics. If you didn't take economics or calculus, the idea is this: maximum profit is earned at some level of production less than 100% capacity to produce, thus suppliers will not (rationally) opt to produce one more unit of "stuff" once they reach the profit maximum levels of production. There are a lot of potential detailed reasons why suppliers behave this way, but at the end of the day, it's because as capitalists, owners do not care to produce one more unit and make less profit on it than they did for the preceding unit.
Please remember, this is an economics, not marketing, discussion; thus pricing strategies and other marketing tactics, all of which are ways producers competitively attempt to manipulate basic economic principles to operate more in their favor than they would absent implementing any marketing tactics. Marketing comes into play the instant the setting moves to monopolistic competition from perfect competition, or, to put it in layman's terms, when "brand" is perceived to have value (factors into the elasticity coefficient) to either the buyer or seller.
- Perfect competition --> the market for men's blue shirts -- A blue shirt is a blue shirt so long as it fits and one is will and able to buy it. The decision process is governed by reason.
- Monopolistic competition --> the market for Polo and/or Armani men's blue shirts. -- A Polo or Armani shirt may be "worth more" than another shirt from the same maker or from a competing producer. Either way, emotion (to some degree) along with reason factor into the buying decision.
Yeah,I'm pretty sure no one read all of that.
Yes, well, that points to what I find most annoying about the membership of this site. Unlike the members of some organizations to which I belong, a lot of folks here make remarks that indicate they don't know "all of that" (I'm referring to the factual content, not the bits that are my inferences/conclusions based on them), yet even when it's put right in front them, they still won't "consume" it.
Hutch Starskey
Diamond Member
- Mar 24, 2015
- 35,391
- 9,170
- 1,340
I haven't read anything other than the title of this thread.
As goes "trickle down" economics, the fact is that like Thomas Sowell, I'm not aware of there being any such actual theory in economics, let alone an economist who has advocated such a thing.
Some years ago, in my syndicated column, I challenged anyone to name any economist, of any school of thought, who had actually advocated a “trickle down” theory. No one quoted any economist, politician or person in any other walk of life who had ever advocated such a theory, even though many readers named someone who claimed that someone else had advocated it, without being able to quote anything actually said by that someone else.Yet, the idea of trickle down economics must come from somewhere, and we know that millions of people are aware of the term -- if not the economics of it -- from a source other than the traditional sources of information for which we cannot produce any empirically testable evidence for it's being know of and believed in: the Bible, Quran, and other scriptural sources. Well, the answer is that the term -- which names the idea that tax cuts and other financial incentives for companies and individuals in the upper tiers of society fuel growth that indirectly benefits everyone, no matter whether he own a mansion or mud hut -- comes from Will Rogers. He once remarked that the Hoover Administration, via tax cuts, was handing out money to the rich in hopes that it would eventually “trickle down to the needy.”
-- Thomas Sowell, "Trickle Down” Theory and “Tax Cuts for the Rich”
Well, that sounds pretty plausible, and basically like a good thing, right? We all surely recognize that cutting everyone's taxes is at least to some degree a good thing for, well, everyone. So what's the problem with "trickle down," or what might be more aptly called "supply side economics" (SSE -- here's a video that explains it in very simple terms), which, frankly, is so "new" that it dates to the 18th century? Well, the answer depends in large measure on three elements:
So let's look at these dimensions.
- the factors of production and their relative roles within an economy,
- the state of income inequality, and
- the difference between before and after cut tax rates.
Factors of Production
Land, labor, capital and entrepreneurship are the factors of production. Suppliers use each in varying degrees to produce the stuff they sell. For supply side initiatives to work, producers must hire workers and pay them a reasonably decent wage at the time of the cuts and hirings. In order for that to happen, at least one of the following must be true:
Income Inequality:
- Production land, labor, entrepreneurship and/or capital:
- Production capacity is materially below the profit maximizing level (PML)** of productivity/production and the society has enough workers with the requisite skills to meet the demand for labor given my maximum (or nearly so) productivity output. How material? Material enough to drive unemployment so that structural levels of unemployment are reached at PML production quantities. This state, as a starting point, produces a rapid boost quite soon after the starting point.
What happens at that point? Everyone who wants to work is working (or will be "tomorrow") at a wage they and employers find acceptable and producers are producing all they can without each marginal unit produced "eating" into their profits. This state can be achieved by SSE tax cuts when, among other things, there is a significant rate of unemployment (8% or more) among adequately skilled workers.
- Production capacity is below PML, but demand vastly outstrips supply. In this situation, the process described above happens again, but only after suppliers have adjusted -- invested in "something" -- so that they can achieve PML at a higher overall quantity of goods produced in order to meet the demand for them. It takes longer for the supply side benefits to kick in when this state is the economy's starting point.
- The labor that exists to be hired (above) will be hired (and retained) rather than not hired because there exists capital that can replace labor more efficiently and effectively. It's pretty easy to understand why and under what circumstance(s) capitalists will engage labor instead of investing in capital; it's a very straight forward cost-benefit decision. When you get farther along in this post, you'll see why this is super important to the efficacy and prospect for success of supply side economics.
- Capital can be purchased so as to allow capitalists to obtain their desired rate of return. This factor drives entrepreneurship (expansion and new) as well as labor and capital purchases.
Looking at Trump's current tax cutting proposals, one cursorily senses from the way his proposal is discussed that at least the proportionality of the cuts would be comparable across all incomes. The fact is, however, that is not that. Trump doesn't propose cut all rates by a given percent. Here's what he proposes.
Now here're a few things to keep in mind from an equality standpoint if one is evaluating the Trump personal income tax proposal. Keep in mind that if you itemize, marginal tax rates don't me a damn thing; if you do not itemize, marginal rates are relevant. What's it take to itemize? For the average American, home ownership is what makes it worth itemizing rather than using the standard deduction. (Approximately 63% of Americans own their home.)
Brackets & Marginal Tax Rates for Married-Joint filers (Brackets for single filers are ½ of these amounts):
- Less than $75,000 12%
- More than $75,000 but less than $225,000 25%
- More than $225,000 33%
Marginal and Effective Tax Rate Impact:
- What is your effective (not marginal) tax rate now? I suspect that it's essentially what he's proposing. I know my marginal rate is higher than his proposed marginal rates, but my effective rate is just a bit shy of what he's proposed for the middle group. So, were I a wage/salaried worker, unless he trashes a bunch of the reductions for which I am eligible, and from what I can tell he's not, my effective tax rate seemingly won't change materially, even though the marginal rate to which I'd ostensibly be subject (the rate applicable to my gross income) is lower. But there's a catch, which I'll discuss a bit later.
To understand what I'm talking about, take a look at what are the current average effective tax rates paid by most folks.
Click on the image to view tables that will show you the average earnings of the folks in each group pictured above. The figures are from 2012, so they will be slightly different for 2015 and 2016, but I think they are close enough for you to get a decent enough sense of what I'm talking about, and unless one is right at the upper or lower ends of a bracket, one is likely in the same bracket now as one was in 2012.
- You'll note (if you clicked on the link) that he'd cap itemized deductions at $200K. What's the impact of that? Folks with predominantly wage and non-business and non-investment income will pay more in federal income tax. Folks with lots of business income and/or investment income either won't see much change at all or they'll realize far lower tax liabilities. Who is that? Doctors, attorneys, investment bankers, C-level and and other senior executive corporate employees (most of these folks greatest compensation comes from stock transactions -- capital gains -- not wages), pretty much anyone who earns their income via a partnership or S Corp. (If you don't understand pass through income, click on the link.)
Consider the example of a married couple whose taxable income (after deductions and exemptions currently is $225K -- very solidly a (upper) middle class couple, but not rich by any stretch of the imagination -- for 2016. What would they pay?
-- Currently, they'd pay at 28%
-- Under the Trump plan, they'd pay at 33%. That's a 5% Trump-tax increase!
That's an $11,250 increase in their tax bill. I suspect for most folks in that income range, that's about two or three mortgage payments. So, you tell me. Do you think that sum won't be seriously missed by a couple earning $225? I'll tell you that it without question would be.
Look back at the chart above. What is the effective tax rate paid by couples who have about $40K/year in taxable income? If you clicked on the chart and looked at Table 7, you'd find that puts a $40K/year (after deductions, exemptions and credits) earner in the top 25% and they currently pay at an effective tax rate of ~7.25 to ~10% even though their marginal rate is 15% and Trump offers a 12% marginal rate.
Now here's the catch for modest earners....If that couple's deduction profile (the deductions they are eligible to take and do take) is no different than it is under the current tax plan -- and those are details we have not been given -- all that'll change is their marginal rate -- the starting rate before deductions, credits and exemptions are calculated, not the actual rate at which they'll pay taxes.
- The Inequity "Catch" that Benefits High Income Folks:
Remember the catch I mentioned earlier? Let's now look at doctors, attorneys, accountants, architects, engineering partners, advertising firm partners, many management consultants, pretty much anyone who's self-employed and doing well -- folks in the ~$400K+ per year range. Since their earned income from practicing medicine will likely flow to them via a pass through entity, that is, an S Corp, LLC or partnership, their earnings received that way will be taxed at...wait for it...15%!
That's not the end of it. Ostensibly, Trump's tax plan appears to have a vendetta to bring against hedge fund and private equity fund managers for he proposes eliminating the carried-interest (interest as in "stake," not interest on money) preference and taxing that kind of income at the ordinary income rate of 33% instead of the current 20%.
That sounds good, but there's a detail that's been left unclarified. What do you think that is? It's that private equity firms and hedge funds are often pass through entities, and Trump's plan is silent on whether that form of business organization would be denied to the partners of such entities. I happen to think that there is no way the folks who are among the richest of the rich are going to let Congress pass legislation that denies them access to the pass through entity provision I just discussed above and foists upon them a 13% marginal tax rate increase that they'll have to work all the harder to deduct down to whatever single-digit to low-teen rates they pay at today. That said, there are still ways around it, not the least of which is to take advantage of the "10% repatriation" provision Trump has proposed. (Note: Either of the last two strategies I mentioned require setting up shell companies -- a la Apple, Google and others -- that exist in name only.)
I pretty much illustrated this aspect as part of the "inequity" discussion, so If you read the preceding section, you know what this is. If you didn't read it, scroll up and read it.
Connecting the Dots:
So with the foregoing concepts and tactics understood, what must one do to figure out the efficacy of supply side economics for oneself and then for the nation?
- Macroeconomically:
- Ask yourself whether the conditions that militate for supply side's positive impact on GDP (aggregate demand) are such that supply side policy work as nicely as it did (nearly so, not quite as well, nowhere near as well, etc.) under Reagan. I happen to think they are not. Why? Because in the early 1980s, the U.S. had just passed the zenith of labor-intensive manufacturing. Factories still needed scores of people. Today, in the aftermath of the digital revolution, regardless of where a factory is, it will not require anywhere near the quantities of workers that were needed in the 1980s. Factory automation technology is now smarter, faster, more maintenance free, etc.
Looking at the chart above, one can see what labor utilization was when, according to Trump, "America was great" and what it is now. With even just the near term capabilities of automation, do you really think manufacturers are going to ever return to the 1970s, or even 1980s levels of employment? I for one am not that naive.
Here are some videos that'll give you a sense of just how automated factories are.
Wood stacking:
Sorting and packaging:
Stacking pancakes
A FANUC machine with a huge array of embedded tools used for a complex assembly process:
Mitsubishi Auto Assembly
Hopefully you watched the video here. If you did and you watched those videos above, you should understand why the supply side tax cuts won't do much for anyone who is an lowly or unskilled worker. Essentially, it's just going to be the next nail in the coffin of "unspectacular" (not meant derisively) workers, that is, folks who have only (mostly) physical skills to offer employers. The most likely reality is that the tax cuts will inspire companies to invest in new equipment, but "you" won't be among the folks who build that equipment unless you are highly skilled/educated and a "mind" worker rather than a "body" worker. I find it nigh impossible to believe that supply side policy will, this time round, stimulate consumption as it did in the 1980s, yet if it's to "work," that's what it must do.- Microeconomically
- After considering the macroeconomic situation, ask yourself where your employer will fit into that picture.
- Now ask yourself where you see yourself (or your kids) fitting into that picture given the macro and micro econ landscape.
- Now ask yourself where you see most other folks, "the middle class," if you will, fitting into the picture.
- Equity and Equality:
- Here, just think about the tax cuts being proposed and ask yourself if you think it'll work out so that it's fair to you and folks like you. I'll tell you now that if you think it'll work out well for for the average American on this basis, you're more optimistic about their future than I am about their future.
I hope I'm wrong and you're not, but I'm one of the folks who'll benefit from the pass-through provisions, and I'm not one of the folks who feels like s/he has no voice in the political process. I just know that if I'm right, there will be a very damaging class war in this country. I don't want that to happen, and that has a lot to do with why I oppose the idea of implementing supply side policy at this point in our history. The supply side policy expectations among the masses are high and the "writing on the wall" does not suggest there's any rational reason for it. Let's be real here. Trump may become President, but he won't have the power of Louis XIV or Henry VIII.
**Note:
Sorry, but the PML idea requires calculus to fully understand, but if you took calculus, you'll likely "get it" -- most likely remember it for it's the classic "stuff" of calculus -- even if you didn't study economics. If you didn't take economics or calculus, the idea is this: maximum profit is earned at some level of production less than 100% capacity to produce, thus suppliers will not (rationally) opt to produce one more unit of "stuff" once they reach the profit maximum levels of production. There are a lot of potential detailed reasons why suppliers behave this way, but at the end of the day, it's because as capitalists, owners do not care to produce one more unit and make less profit on it than they did for the preceding unit.
Please remember, this is an economics, not marketing, discussion; thus pricing strategies and other marketing tactics, all of which are ways producers competitively attempt to manipulate basic economic principles to operate more in their favor than they would absent implementing any marketing tactics. Marketing comes into play the instant the setting moves to monopolistic competition from perfect competition, or, to put it in layman's terms, when "brand" is perceived to have value (factors into the elasticity coefficient) to either the buyer or seller.
- Perfect competition --> the market for men's blue shirts -- A blue shirt is a blue shirt so long as it fits and one is will and able to buy it. The decision process is governed by reason.
- Monopolistic competition --> the market for Polo and/or Armani men's blue shirts. -- A Polo or Armani shirt may be "worth more" than another shirt from the same maker or from a competing producer. Either way, emotion (to some degree) along with reason factor into the buying decision.
Yeah,I'm pretty sure no one read all of that.
Yes, well, that points to what I find most annoying about the membership of this site. Unlike the members of some organizations to which I belong, a lot of folks here make remarks that indicate they don't know "all of that" (I'm referring to the factual content, not the bits that are my inferences/conclusions based on them), yet even when it's put right in front them, they still won't "consume" it.
I made no comment regarding the content.
Only the length.
If you want to go that deeply into it, you should start a thread. This isn't an Econ final. Not everyone has the time to put into such a post.
320 Years of History
Gold Member
I haven't read anything other than the title of this thread.
As goes "trickle down" economics, the fact is that like Thomas Sowell, I'm not aware of there being any such actual theory in economics, let alone an economist who has advocated such a thing.
Some years ago, in my syndicated column, I challenged anyone to name any economist, of any school of thought, who had actually advocated a “trickle down” theory. No one quoted any economist, politician or person in any other walk of life who had ever advocated such a theory, even though many readers named someone who claimed that someone else had advocated it, without being able to quote anything actually said by that someone else.Yet, the idea of trickle down economics must come from somewhere, and we know that millions of people are aware of the term -- if not the economics of it -- from a source other than the traditional sources of information for which we cannot produce any empirically testable evidence for it's being know of and believed in: the Bible, Quran, and other scriptural sources. Well, the answer is that the term -- which names the idea that tax cuts and other financial incentives for companies and individuals in the upper tiers of society fuel growth that indirectly benefits everyone, no matter whether he own a mansion or mud hut -- comes from Will Rogers. He once remarked that the Hoover Administration, via tax cuts, was handing out money to the rich in hopes that it would eventually “trickle down to the needy.”
-- Thomas Sowell, "Trickle Down” Theory and “Tax Cuts for the Rich”
Well, that sounds pretty plausible, and basically like a good thing, right? We all surely recognize that cutting everyone's taxes is at least to some degree a good thing for, well, everyone. So what's the problem with "trickle down," or what might be more aptly called "supply side economics" (SSE -- here's a video that explains it in very simple terms), which, frankly, is so "new" that it dates to the 18th century? Well, the answer depends in large measure on three elements:
So let's look at these dimensions.
- the factors of production and their relative roles within an economy,
- the state of income inequality, and
- the difference between before and after cut tax rates.
Factors of Production
Land, labor, capital and entrepreneurship are the factors of production. Suppliers use each in varying degrees to produce the stuff they sell. For supply side initiatives to work, producers must hire workers and pay them a reasonably decent wage at the time of the cuts and hirings. In order for that to happen, at least one of the following must be true:
Income Inequality:
- Production land, labor, entrepreneurship and/or capital:
- Production capacity is materially below the profit maximizing level (PML)** of productivity/production and the society has enough workers with the requisite skills to meet the demand for labor given my maximum (or nearly so) productivity output. How material? Material enough to drive unemployment so that structural levels of unemployment are reached at PML production quantities. This state, as a starting point, produces a rapid boost quite soon after the starting point.
What happens at that point? Everyone who wants to work is working (or will be "tomorrow") at a wage they and employers find acceptable and producers are producing all they can without each marginal unit produced "eating" into their profits. This state can be achieved by SSE tax cuts when, among other things, there is a significant rate of unemployment (8% or more) among adequately skilled workers.
- Production capacity is below PML, but demand vastly outstrips supply. In this situation, the process described above happens again, but only after suppliers have adjusted -- invested in "something" -- so that they can achieve PML at a higher overall quantity of goods produced in order to meet the demand for them. It takes longer for the supply side benefits to kick in when this state is the economy's starting point.
- The labor that exists to be hired (above) will be hired (and retained) rather than not hired because there exists capital that can replace labor more efficiently and effectively. It's pretty easy to understand why and under what circumstance(s) capitalists will engage labor instead of investing in capital; it's a very straight forward cost-benefit decision. When you get farther along in this post, you'll see why this is super important to the efficacy and prospect for success of supply side economics.
- Capital can be purchased so as to allow capitalists to obtain their desired rate of return. This factor drives entrepreneurship (expansion and new) as well as labor and capital purchases.
Looking at Trump's current tax cutting proposals, one cursorily senses from the way his proposal is discussed that at least the proportionality of the cuts would be comparable across all incomes. The fact is, however, that is not that. Trump doesn't propose cut all rates by a given percent. Here's what he proposes.
Now here're a few things to keep in mind from an equality standpoint if one is evaluating the Trump personal income tax proposal. Keep in mind that if you itemize, marginal tax rates don't me a damn thing; if you do not itemize, marginal rates are relevant. What's it take to itemize? For the average American, home ownership is what makes it worth itemizing rather than using the standard deduction. (Approximately 63% of Americans own their home.)
Brackets & Marginal Tax Rates for Married-Joint filers (Brackets for single filers are ½ of these amounts):
- Less than $75,000 12%
- More than $75,000 but less than $225,000 25%
- More than $225,000 33%
Marginal and Effective Tax Rate Impact:
- What is your effective (not marginal) tax rate now? I suspect that it's essentially what he's proposing. I know my marginal rate is higher than his proposed marginal rates, but my effective rate is just a bit shy of what he's proposed for the middle group. So, were I a wage/salaried worker, unless he trashes a bunch of the reductions for which I am eligible, and from what I can tell he's not, my effective tax rate seemingly won't change materially, even though the marginal rate to which I'd ostensibly be subject (the rate applicable to my gross income) is lower. But there's a catch, which I'll discuss a bit later.
To understand what I'm talking about, take a look at what are the current average effective tax rates paid by most folks.
Click on the image to view tables that will show you the average earnings of the folks in each group pictured above. The figures are from 2012, so they will be slightly different for 2015 and 2016, but I think they are close enough for you to get a decent enough sense of what I'm talking about, and unless one is right at the upper or lower ends of a bracket, one is likely in the same bracket now as one was in 2012.
- You'll note (if you clicked on the link) that he'd cap itemized deductions at $200K. What's the impact of that? Folks with predominantly wage and non-business and non-investment income will pay more in federal income tax. Folks with lots of business income and/or investment income either won't see much change at all or they'll realize far lower tax liabilities. Who is that? Doctors, attorneys, investment bankers, C-level and and other senior executive corporate employees (most of these folks greatest compensation comes from stock transactions -- capital gains -- not wages), pretty much anyone who earns their income via a partnership or S Corp. (If you don't understand pass through income, click on the link.)
Consider the example of a married couple whose taxable income (after deductions and exemptions currently is $225K -- very solidly a (upper) middle class couple, but not rich by any stretch of the imagination -- for 2016. What would they pay?
-- Currently, they'd pay at 28%
-- Under the Trump plan, they'd pay at 33%. That's a 5% Trump-tax increase!
That's an $11,250 increase in their tax bill. I suspect for most folks in that income range, that's about two or three mortgage payments. So, you tell me. Do you think that sum won't be seriously missed by a couple earning $225? I'll tell you that it without question would be.
Look back at the chart above. What is the effective tax rate paid by couples who have about $40K/year in taxable income? If you clicked on the chart and looked at Table 7, you'd find that puts a $40K/year (after deductions, exemptions and credits) earner in the top 25% and they currently pay at an effective tax rate of ~7.25 to ~10% even though their marginal rate is 15% and Trump offers a 12% marginal rate.
Now here's the catch for modest earners....If that couple's deduction profile (the deductions they are eligible to take and do take) is no different than it is under the current tax plan -- and those are details we have not been given -- all that'll change is their marginal rate -- the starting rate before deductions, credits and exemptions are calculated, not the actual rate at which they'll pay taxes.
- The Inequity "Catch" that Benefits High Income Folks:
Remember the catch I mentioned earlier? Let's now look at doctors, attorneys, accountants, architects, engineering partners, advertising firm partners, many management consultants, pretty much anyone who's self-employed and doing well -- folks in the ~$400K+ per year range. Since their earned income from practicing medicine will likely flow to them via a pass through entity, that is, an S Corp, LLC or partnership, their earnings received that way will be taxed at...wait for it...15%!
That's not the end of it. Ostensibly, Trump's tax plan appears to have a vendetta to bring against hedge fund and private equity fund managers for he proposes eliminating the carried-interest (interest as in "stake," not interest on money) preference and taxing that kind of income at the ordinary income rate of 33% instead of the current 20%.
That sounds good, but there's a detail that's been left unclarified. What do you think that is? It's that private equity firms and hedge funds are often pass through entities, and Trump's plan is silent on whether that form of business organization would be denied to the partners of such entities. I happen to think that there is no way the folks who are among the richest of the rich are going to let Congress pass legislation that denies them access to the pass through entity provision I just discussed above and foists upon them a 13% marginal tax rate increase that they'll have to work all the harder to deduct down to whatever single-digit to low-teen rates they pay at today. That said, there are still ways around it, not the least of which is to take advantage of the "10% repatriation" provision Trump has proposed. (Note: Either of the last two strategies I mentioned require setting up shell companies -- a la Apple, Google and others -- that exist in name only.)
I pretty much illustrated this aspect as part of the "inequity" discussion, so If you read the preceding section, you know what this is. If you didn't read it, scroll up and read it.
Connecting the Dots:
So with the foregoing concepts and tactics understood, what must one do to figure out the efficacy of supply side economics for oneself and then for the nation?
- Macroeconomically:
- Ask yourself whether the conditions that militate for supply side's positive impact on GDP (aggregate demand) are such that supply side policy work as nicely as it did (nearly so, not quite as well, nowhere near as well, etc.) under Reagan. I happen to think they are not. Why? Because in the early 1980s, the U.S. had just passed the zenith of labor-intensive manufacturing. Factories still needed scores of people. Today, in the aftermath of the digital revolution, regardless of where a factory is, it will not require anywhere near the quantities of workers that were needed in the 1980s. Factory automation technology is now smarter, faster, more maintenance free, etc.
Looking at the chart above, one can see what labor utilization was when, according to Trump, "America was great" and what it is now. With even just the near term capabilities of automation, do you really think manufacturers are going to ever return to the 1970s, or even 1980s levels of employment? I for one am not that naive.
Here are some videos that'll give you a sense of just how automated factories are.
Wood stacking:
Sorting and packaging:
Stacking pancakes
A FANUC machine with a huge array of embedded tools used for a complex assembly process:
Mitsubishi Auto Assembly
Hopefully you watched the video here. If you did and you watched those videos above, you should understand why the supply side tax cuts won't do much for anyone who is an lowly or unskilled worker. Essentially, it's just going to be the next nail in the coffin of "unspectacular" (not meant derisively) workers, that is, folks who have only (mostly) physical skills to offer employers. The most likely reality is that the tax cuts will inspire companies to invest in new equipment, but "you" won't be among the folks who build that equipment unless you are highly skilled/educated and a "mind" worker rather than a "body" worker. I find it nigh impossible to believe that supply side policy will, this time round, stimulate consumption as it did in the 1980s, yet if it's to "work," that's what it must do.- Microeconomically
- After considering the macroeconomic situation, ask yourself where your employer will fit into that picture.
- Now ask yourself where you see yourself (or your kids) fitting into that picture given the macro and micro econ landscape.
- Now ask yourself where you see most other folks, "the middle class," if you will, fitting into the picture.
- Equity and Equality:
- Here, just think about the tax cuts being proposed and ask yourself if you think it'll work out so that it's fair to you and folks like you. I'll tell you now that if you think it'll work out well for for the average American on this basis, you're more optimistic about their future than I am about their future.
I hope I'm wrong and you're not, but I'm one of the folks who'll benefit from the pass-through provisions, and I'm not one of the folks who feels like s/he has no voice in the political process. I just know that if I'm right, there will be a very damaging class war in this country. I don't want that to happen, and that has a lot to do with why I oppose the idea of implementing supply side policy at this point in our history. The supply side policy expectations among the masses are high and the "writing on the wall" does not suggest there's any rational reason for it. Let's be real here. Trump may become President, but he won't have the power of Louis XIV or Henry VIII.
**Note:
Sorry, but the PML idea requires calculus to fully understand, but if you took calculus, you'll likely "get it" -- most likely remember it for it's the classic "stuff" of calculus -- even if you didn't study economics. If you didn't take economics or calculus, the idea is this: maximum profit is earned at some level of production less than 100% capacity to produce, thus suppliers will not (rationally) opt to produce one more unit of "stuff" once they reach the profit maximum levels of production. There are a lot of potential detailed reasons why suppliers behave this way, but at the end of the day, it's because as capitalists, owners do not care to produce one more unit and make less profit on it than they did for the preceding unit.
Please remember, this is an economics, not marketing, discussion; thus pricing strategies and other marketing tactics, all of which are ways producers competitively attempt to manipulate basic economic principles to operate more in their favor than they would absent implementing any marketing tactics. Marketing comes into play the instant the setting moves to monopolistic competition from perfect competition, or, to put it in layman's terms, when "brand" is perceived to have value (factors into the elasticity coefficient) to either the buyer or seller.
- Perfect competition --> the market for men's blue shirts -- A blue shirt is a blue shirt so long as it fits and one is will and able to buy it. The decision process is governed by reason.
- Monopolistic competition --> the market for Polo and/or Armani men's blue shirts. -- A Polo or Armani shirt may be "worth more" than another shirt from the same maker or from a competing producer. Either way, emotion (to some degree) along with reason factor into the buying decision.
Yeah,I'm pretty sure no one read all of that.
Yes, well, that points to what I find most annoying about the membership of this site. Unlike the members of some organizations to which I belong, a lot of folks here make remarks that indicate they don't know "all of that" (I'm referring to the factual content, not the bits that are my inferences/conclusions based on them), yet even when it's put right in front them, they still won't "consume" it.
I made no comment regarding the content.
Only the length.
If you want to go that deeply into it, you should start a thread. Not everyone has the time to put into such a post.
Blue:
I realize that. I did read your post. I am actually a very good reader, and I can tell what a writer does and does not say.
Other:
Truly, I am unaccustomed to feeling the need to go into that much detail. Without exception, when I'm at a dinner or garden party, chatting at a social club, chatting on a plane, etc. I have discussions that have topics/themes similar to those broached here. Unlike here, when someone or I says something such as, "The tax cuts will benefit 'so and so,' but the overall impact won't be remotely close to what Reagan produced," the other people there -- no matter their political persuasion -- understand exactly why that was said and what factors make it true and to what degree they do and to what degree those same factors don't.
Nobody has to go into all that detail because everyone there knows what they are talking about, and everyone knows the other parties to the discussion know what they are talking about. Nobody says things that just don't make sense and that don't have a connection to well understood (by anyone who's studied them) concepts and models. If someone wants to introduce a countervailing idea, they at least begin with something like, "Yes, that's true; however, if we can make 'such and such' happen....," and they go on to present the ideas that explain why the impact of "whatever" will be greater or lesser than what the other speaker presented. They don't just out of hand attempt to discredit well proven theories and the person's remarks. They don't do that because they know the other person isn't wrong. The aim of the conversation is not to show someone is right or wrong, but to consider ideas, to pose and discuss original solutions, to find ways to make things work, to address the agreed-upon-by-all shortcomings of a given proposal, etc.
Here, it's just not that way. One can write something basic about an economic or business topic, and folks here will in droves argue and nitpick over stuff that nobody who actually does understand the topic would even mention, often stuff that isn't even central to the point one has made. It's as though folks are just looking for something to argue about rather than actually aiming to have a substantive conversation. So when I make those long posts, the goal is to make information readily available to others who may not have encountered and fully and carefully thought about it so that we can have a substantive conversation about it.
Hutch Starskey
Diamond Member
- Mar 24, 2015
- 35,391
- 9,170
- 1,340
I haven't read anything other than the title of this thread.
As goes "trickle down" economics, the fact is that like Thomas Sowell, I'm not aware of there being any such actual theory in economics, let alone an economist who has advocated such a thing.
Some years ago, in my syndicated column, I challenged anyone to name any economist, of any school of thought, who had actually advocated a “trickle down” theory. No one quoted any economist, politician or person in any other walk of life who had ever advocated such a theory, even though many readers named someone who claimed that someone else had advocated it, without being able to quote anything actually said by that someone else.Yet, the idea of trickle down economics must come from somewhere, and we know that millions of people are aware of the term -- if not the economics of it -- from a source other than the traditional sources of information for which we cannot produce any empirically testable evidence for it's being know of and believed in: the Bible, Quran, and other scriptural sources. Well, the answer is that the term -- which names the idea that tax cuts and other financial incentives for companies and individuals in the upper tiers of society fuel growth that indirectly benefits everyone, no matter whether he own a mansion or mud hut -- comes from Will Rogers. He once remarked that the Hoover Administration, via tax cuts, was handing out money to the rich in hopes that it would eventually “trickle down to the needy.”
-- Thomas Sowell, "Trickle Down” Theory and “Tax Cuts for the Rich”
Well, that sounds pretty plausible, and basically like a good thing, right? We all surely recognize that cutting everyone's taxes is at least to some degree a good thing for, well, everyone. So what's the problem with "trickle down," or what might be more aptly called "supply side economics" (SSE -- here's a video that explains it in very simple terms), which, frankly, is so "new" that it dates to the 18th century? Well, the answer depends in large measure on three elements:
So let's look at these dimensions.
- the factors of production and their relative roles within an economy,
- the state of income inequality, and
- the difference between before and after cut tax rates.
Factors of Production
Land, labor, capital and entrepreneurship are the factors of production. Suppliers use each in varying degrees to produce the stuff they sell. For supply side initiatives to work, producers must hire workers and pay them a reasonably decent wage at the time of the cuts and hirings. In order for that to happen, at least one of the following must be true:
Income Inequality:
- Production land, labor, entrepreneurship and/or capital:
- Production capacity is materially below the profit maximizing level (PML)** of productivity/production and the society has enough workers with the requisite skills to meet the demand for labor given my maximum (or nearly so) productivity output. How material? Material enough to drive unemployment so that structural levels of unemployment are reached at PML production quantities. This state, as a starting point, produces a rapid boost quite soon after the starting point.
What happens at that point? Everyone who wants to work is working (or will be "tomorrow") at a wage they and employers find acceptable and producers are producing all they can without each marginal unit produced "eating" into their profits. This state can be achieved by SSE tax cuts when, among other things, there is a significant rate of unemployment (8% or more) among adequately skilled workers.
- Production capacity is below PML, but demand vastly outstrips supply. In this situation, the process described above happens again, but only after suppliers have adjusted -- invested in "something" -- so that they can achieve PML at a higher overall quantity of goods produced in order to meet the demand for them. It takes longer for the supply side benefits to kick in when this state is the economy's starting point.
- The labor that exists to be hired (above) will be hired (and retained) rather than not hired because there exists capital that can replace labor more efficiently and effectively. It's pretty easy to understand why and under what circumstance(s) capitalists will engage labor instead of investing in capital; it's a very straight forward cost-benefit decision. When you get farther along in this post, you'll see why this is super important to the efficacy and prospect for success of supply side economics.
- Capital can be purchased so as to allow capitalists to obtain their desired rate of return. This factor drives entrepreneurship (expansion and new) as well as labor and capital purchases.
Looking at Trump's current tax cutting proposals, one cursorily senses from the way his proposal is discussed that at least the proportionality of the cuts would be comparable across all incomes. The fact is, however, that is not that. Trump doesn't propose cut all rates by a given percent. Here's what he proposes.
Now here're a few things to keep in mind from an equality standpoint if one is evaluating the Trump personal income tax proposal. Keep in mind that if you itemize, marginal tax rates don't me a damn thing; if you do not itemize, marginal rates are relevant. What's it take to itemize? For the average American, home ownership is what makes it worth itemizing rather than using the standard deduction. (Approximately 63% of Americans own their home.)
Brackets & Marginal Tax Rates for Married-Joint filers (Brackets for single filers are ½ of these amounts):
- Less than $75,000 12%
- More than $75,000 but less than $225,000 25%
- More than $225,000 33%
Marginal and Effective Tax Rate Impact:
- What is your effective (not marginal) tax rate now? I suspect that it's essentially what he's proposing. I know my marginal rate is higher than his proposed marginal rates, but my effective rate is just a bit shy of what he's proposed for the middle group. So, were I a wage/salaried worker, unless he trashes a bunch of the reductions for which I am eligible, and from what I can tell he's not, my effective tax rate seemingly won't change materially, even though the marginal rate to which I'd ostensibly be subject (the rate applicable to my gross income) is lower. But there's a catch, which I'll discuss a bit later.
To understand what I'm talking about, take a look at what are the current average effective tax rates paid by most folks.
Click on the image to view tables that will show you the average earnings of the folks in each group pictured above. The figures are from 2012, so they will be slightly different for 2015 and 2016, but I think they are close enough for you to get a decent enough sense of what I'm talking about, and unless one is right at the upper or lower ends of a bracket, one is likely in the same bracket now as one was in 2012.
- You'll note (if you clicked on the link) that he'd cap itemized deductions at $200K. What's the impact of that? Folks with predominantly wage and non-business and non-investment income will pay more in federal income tax. Folks with lots of business income and/or investment income either won't see much change at all or they'll realize far lower tax liabilities. Who is that? Doctors, attorneys, investment bankers, C-level and and other senior executive corporate employees (most of these folks greatest compensation comes from stock transactions -- capital gains -- not wages), pretty much anyone who earns their income via a partnership or S Corp. (If you don't understand pass through income, click on the link.)
Consider the example of a married couple whose taxable income (after deductions and exemptions currently is $225K -- very solidly a (upper) middle class couple, but not rich by any stretch of the imagination -- for 2016. What would they pay?
-- Currently, they'd pay at 28%
-- Under the Trump plan, they'd pay at 33%. That's a 5% Trump-tax increase!
That's an $11,250 increase in their tax bill. I suspect for most folks in that income range, that's about two or three mortgage payments. So, you tell me. Do you think that sum won't be seriously missed by a couple earning $225? I'll tell you that it without question would be.
Look back at the chart above. What is the effective tax rate paid by couples who have about $40K/year in taxable income? If you clicked on the chart and looked at Table 7, you'd find that puts a $40K/year (after deductions, exemptions and credits) earner in the top 25% and they currently pay at an effective tax rate of ~7.25 to ~10% even though their marginal rate is 15% and Trump offers a 12% marginal rate.
Now here's the catch for modest earners....If that couple's deduction profile (the deductions they are eligible to take and do take) is no different than it is under the current tax plan -- and those are details we have not been given -- all that'll change is their marginal rate -- the starting rate before deductions, credits and exemptions are calculated, not the actual rate at which they'll pay taxes.
- The Inequity "Catch" that Benefits High Income Folks:
Remember the catch I mentioned earlier? Let's now look at doctors, attorneys, accountants, architects, engineering partners, advertising firm partners, many management consultants, pretty much anyone who's self-employed and doing well -- folks in the ~$400K+ per year range. Since their earned income from practicing medicine will likely flow to them via a pass through entity, that is, an S Corp, LLC or partnership, their earnings received that way will be taxed at...wait for it...15%!
That's not the end of it. Ostensibly, Trump's tax plan appears to have a vendetta to bring against hedge fund and private equity fund managers for he proposes eliminating the carried-interest (interest as in "stake," not interest on money) preference and taxing that kind of income at the ordinary income rate of 33% instead of the current 20%.
That sounds good, but there's a detail that's been left unclarified. What do you think that is? It's that private equity firms and hedge funds are often pass through entities, and Trump's plan is silent on whether that form of business organization would be denied to the partners of such entities. I happen to think that there is no way the folks who are among the richest of the rich are going to let Congress pass legislation that denies them access to the pass through entity provision I just discussed above and foists upon them a 13% marginal tax rate increase that they'll have to work all the harder to deduct down to whatever single-digit to low-teen rates they pay at today. That said, there are still ways around it, not the least of which is to take advantage of the "10% repatriation" provision Trump has proposed. (Note: Either of the last two strategies I mentioned require setting up shell companies -- a la Apple, Google and others -- that exist in name only.)
I pretty much illustrated this aspect as part of the "inequity" discussion, so If you read the preceding section, you know what this is. If you didn't read it, scroll up and read it.
Connecting the Dots:
So with the foregoing concepts and tactics understood, what must one do to figure out the efficacy of supply side economics for oneself and then for the nation?
- Macroeconomically:
- Ask yourself whether the conditions that militate for supply side's positive impact on GDP (aggregate demand) are such that supply side policy work as nicely as it did (nearly so, not quite as well, nowhere near as well, etc.) under Reagan. I happen to think they are not. Why? Because in the early 1980s, the U.S. had just passed the zenith of labor-intensive manufacturing. Factories still needed scores of people. Today, in the aftermath of the digital revolution, regardless of where a factory is, it will not require anywhere near the quantities of workers that were needed in the 1980s. Factory automation technology is now smarter, faster, more maintenance free, etc.
Looking at the chart above, one can see what labor utilization was when, according to Trump, "America was great" and what it is now. With even just the near term capabilities of automation, do you really think manufacturers are going to ever return to the 1970s, or even 1980s levels of employment? I for one am not that naive.
Here are some videos that'll give you a sense of just how automated factories are.
Wood stacking:
Sorting and packaging:
Stacking pancakes
A FANUC machine with a huge array of embedded tools used for a complex assembly process:
Mitsubishi Auto Assembly
Hopefully you watched the video here. If you did and you watched those videos above, you should understand why the supply side tax cuts won't do much for anyone who is an lowly or unskilled worker. Essentially, it's just going to be the next nail in the coffin of "unspectacular" (not meant derisively) workers, that is, folks who have only (mostly) physical skills to offer employers. The most likely reality is that the tax cuts will inspire companies to invest in new equipment, but "you" won't be among the folks who build that equipment unless you are highly skilled/educated and a "mind" worker rather than a "body" worker. I find it nigh impossible to believe that supply side policy will, this time round, stimulate consumption as it did in the 1980s, yet if it's to "work," that's what it must do.- Microeconomically
- After considering the macroeconomic situation, ask yourself where your employer will fit into that picture.
- Now ask yourself where you see yourself (or your kids) fitting into that picture given the macro and micro econ landscape.
- Now ask yourself where you see most other folks, "the middle class," if you will, fitting into the picture.
- Equity and Equality:
- Here, just think about the tax cuts being proposed and ask yourself if you think it'll work out so that it's fair to you and folks like you. I'll tell you now that if you think it'll work out well for for the average American on this basis, you're more optimistic about their future than I am about their future.
I hope I'm wrong and you're not, but I'm one of the folks who'll benefit from the pass-through provisions, and I'm not one of the folks who feels like s/he has no voice in the political process. I just know that if I'm right, there will be a very damaging class war in this country. I don't want that to happen, and that has a lot to do with why I oppose the idea of implementing supply side policy at this point in our history. The supply side policy expectations among the masses are high and the "writing on the wall" does not suggest there's any rational reason for it. Let's be real here. Trump may become President, but he won't have the power of Louis XIV or Henry VIII.
**Note:
Sorry, but the PML idea requires calculus to fully understand, but if you took calculus, you'll likely "get it" -- most likely remember it for it's the classic "stuff" of calculus -- even if you didn't study economics. If you didn't take economics or calculus, the idea is this: maximum profit is earned at some level of production less than 100% capacity to produce, thus suppliers will not (rationally) opt to produce one more unit of "stuff" once they reach the profit maximum levels of production. There are a lot of potential detailed reasons why suppliers behave this way, but at the end of the day, it's because as capitalists, owners do not care to produce one more unit and make less profit on it than they did for the preceding unit.
Please remember, this is an economics, not marketing, discussion; thus pricing strategies and other marketing tactics, all of which are ways producers competitively attempt to manipulate basic economic principles to operate more in their favor than they would absent implementing any marketing tactics. Marketing comes into play the instant the setting moves to monopolistic competition from perfect competition, or, to put it in layman's terms, when "brand" is perceived to have value (factors into the elasticity coefficient) to either the buyer or seller.
- Perfect competition --> the market for men's blue shirts -- A blue shirt is a blue shirt so long as it fits and one is will and able to buy it. The decision process is governed by reason.
- Monopolistic competition --> the market for Polo and/or Armani men's blue shirts. -- A Polo or Armani shirt may be "worth more" than another shirt from the same maker or from a competing producer. Either way, emotion (to some degree) along with reason factor into the buying decision.
Yeah,I'm pretty sure no one read all of that.
Yes, well, that points to what I find most annoying about the membership of this site. Unlike the members of some organizations to which I belong, a lot of folks here make remarks that indicate they don't know "all of that" (I'm referring to the factual content, not the bits that are my inferences/conclusions based on them), yet even when it's put right in front them, they still won't "consume" it.
I made no comment regarding the content.
Only the length.
If you want to go that deeply into it, you should start a thread. Not everyone has the time to put into such a post.
Blue:
I realize that. I did read your post. I am actually a very good reader, and I can tell what a writer does and does not say.
Other:
Truly, I am unaccustomed to feeling the need to go into that much detail. Without exception, when I'm at a dinner or garden party, chatting at a social club, chatting on a plane, etc. I have discussions that have topics/themes similar to those broached here. Unlike here, when someone or I says something such as, "The tax cuts will benefit 'so and so,' but the overall impact won't be remotely close to what Reagan produced," the other people there -- no matter their political persuasion -- understand exactly why that was said and what factors make it true and to what degree they do and to what degree those same factors don't.
Nobody has to go into all that detail because everyone there knows what they are talking about, and everyone knows the other parties to the discussion know what they are talking about. Nobody says things that just don't make sense and that don't have a connection to well understood (by anyone who's studied them) concepts and models. If someone wants to introduce a countervailing idea, they at least begin with something like, "Yes, that's true; however, if we can make 'such and such' happen....," and they go on to present the ideas that explain why the impact of "whatever" will be greater or lesser than what the other speaker presented. They don't just out of hand attempt to discredit well proven theories and the person's remarks. They don't do that because they know the other person isn't wrong. The aim of the conversation is not to show someone is right or wrong, but to consider ideas, to pose and discuss original solutions, to find ways to make things work, to address the agreed-upon-by-all shortcomings of a given proposal, etc.
Here, it's just not that way. One can write something basic about an economic or business topic, and folks here will in droves argue and nitpick over stuff that nobody who actually does understand the topic would even mention, often stuff that isn't even central to the point one has made. It's as though folks are just looking for something to argue about rather than actually aiming to have a substantive conversation. So when I make those long posts, the goal is to make information readily available to others who may not have encountered and fully and carefully thought about it so that we can have a substantive conversation about it.
I agree completely. I suppose it's a just a stylistic difference. I tend to just pick one thing at a time focus on. Most of these guys don't have a clue and wouldn't read it let alone appreciate such comprehensive
explanation. It's wasted on most here. Just trying to save you the effort.
Clementine
Platinum Member
- Dec 18, 2011
- 12,919
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The government controlling the market is what you call true trickle down. And when government steals our money, very little of it trickles back down to the people. It goes to foreign countries and in the pockets of bureaucrats and campaign donors.
Capitalism doesn't steal from people. Crony capitalism does and that is government's fault.
The left does these things deliberately in order to bring down capitalism. They want socialism and the only way to get it is to dumb down people and then convince them that all their problems are the fault of wealthy capitalists. Oh, you better include all those middle class capitalists, too.
rightwinger
Award Winning USMB Paid Messageboard Poster
- Aug 4, 2009
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edthecynic
Censored for Cynicism
- Oct 20, 2008
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Actually they are referred to as MISinformation voters.I compared the data from the ACTUAL Table 678, not your fictitious Table 678.How typical of liberals to compare data from two different time periods, and then whine at they don't match.
These people get quite silly when they are trying to avoid the truth.
And they wonder why everyone refers to the republican base as the low-information voters.
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