The logic of tax cuts on the rich.

[CastletonSnob]

Can someone tell me the logic in thinking that reducing taxes on the rich, who make up a significant portion of the country’s money will stimulate the economy?

Simple logic should tell you that RAISING taxes on the rich would stimulate the economy.

 

[Cubo de Sangre]

Pretty simple. The government won't spend that money on us poor folks, but the rich people will.

 

[Greoric]

Because rich people are saving their surplus, not consuming everything they earn (necessarily or otherwise) like less wealthy people are. That surplus and savings is what expands the production base and allows for more production, which is the goal of an economy because that allows more consumption in the future, a greater amount of resources available for the average person, and a raised standard of living for everyone.

Savings and underconsumption is the foundation for why economies grow. Wealthy people are a large part of that.

Glad I could address this question early, before the stupid creeps into this thread.

 

[Johnny Mac]

TS went to The Bernie Sanders School of Economics.

 

[panamaican]

@Cubo de Sangre has the gist of it.

The assumption is the money that rich people save on taxes will be spent on purchasing things that stimulate the economy and through those purchases it will create jobs for those who aren't rich. Of course, if the rich simply save their money and/or invest it then it stimulates the economies where the banks lend that money, which might not be here.

Giving the money to the government only makes sense if the government is going to spend it on things that benefit the people and the economy. Well, there's an argument to be made that they don't always do that well.

 

[MayhemMonkey]

because the wealthy are the most protected group in America..... theyve brainwashed the pawns to vote against their own interests

 

[M3t4tr0n]

It's because the rich have suffered enough and when they see the money they are saving the rich will be so thankful they will run out and give everyone huge raises and bonuses. Yay trickle down economics!

Spoiler

 

[Greoric]

@Cubo de Sangre has the gist of it.

The assumption is the money that rich people save on taxes will be spent on purchasing things that stimulate the economy and through those purchases it will create jobs for those who aren't rich. Of course, if the rich simply save their money and/or invest it then it stimulates the economies where the banks lend that money, which might not be here.

The spending doesn't stimulate the economy. Their savings do. The added consumption we can take part in is only because underconsumption happened first.

 

[M3t4tr0n]

TS went to The Bernie Sanders School of Economics.

Should have went to Trump U like the other genius Drumplings of the war room.

 

[Greoric]

It's because the rich have suffered enough and when they see the money they are saving the rich will be so thankful they will run out and give everyone huge raises and bonuses. Yay trickle down economics!

Spoiler

That's not even necessary for their wealth to have a benefit for society. Unlike what I've already read on here, their spending isn't what benefits growth. Its the opposite. The fact that they're NOT spending money on consuming shit, just allows those resources in the form of money to be deployed for productive efforts via credit.

 

[cincymma79]

Can someone tell me the logic in thinking that reducing taxes on the rich, who make up a significant portion of the country’s money will stimulate the economy?

Simple logic should tell you that RAISING taxes on the rich would stimulate the economy.

what rate should they be taxed at? it's already higher than yours so give me a number

 

[KONG-D'SNT-TAP]

The spending doesn't stimulate the economy. Their savings do. The added consumption we can take part in is only because underconsumption happened first.

So spending doesn't stimulate the economy?

 

[MayhemMonkey]

So spending doesn't stimulate the economy?

apparently removing money from circulation is the best way.... in his mind

 

[Greoric]

So spending doesn't stimulate the economy?

Absolutely not. Any increase in consumption is just the consequence of a stimulated economy, and those result from people living beneath their means (saving capital for productive efforts).... not living over them.

 

[KONG-D'SNT-TAP]

Absolutely not. Any increase in consumption is just the consequence of a stimulated economy, and stimulated economies result from people living beneath their means (saving fucking capital for productive efforts).... not living over them.

so people spending money doesn't stimulate the economy?

Or when government spends?

 

[Greoric]

apparently removing money from circulation is the best way.... in his mind

Saving money isn't removing money from the economy, you dolt. What do you think people do, store their shit under their bed?

 

[Cubo de Sangre]

The spending doesn't stimulate the economy. Their savings do. The added consumption we can take part in is only because underconsumption happened first.

Isn't that gold-standard talk? In the system we actually operate in, don't we just expand credit as deemed necessary?

 

[MayhemMonkey]

Saving money isn't removing money from the economy, you dolt. What do you think people do, store their shit under their bed?

if the money isnt being used it is no longer "in circulation" so it technically is removing money from the economy. Savings are important, but so is spending. To say one is more important than the other is just idiotic

 

[panamaican]

The spending doesn't stimulate the economy. Their savings do. The added consumption we can take part in is only because underconsumption happened first.

It's both components. Spending and investment.

 

[Greoric]

so people spending money doesn't stimulate the economy?

You asked the same question twice, despite me answering you directly. NO. Spending does NOT stimulate the economy. Growth does not occur from increased consumption. That is the opposite of reality. Growth comes from under consuming the capital stock to produce more, and then you can fucking consume more. The spending is the ends. It's no the means.