Do tax cuts stimulate the economy? - Jonathan Smith
Вставка
- Опубліковано 11 лип 2024
- Dig into trickle-down economics, which claims that tax cuts for corporations and the wealthy stimulate the economy and improve people's lives.
--
In 1981, the US economy was struggling: unemployment rates were climbing and inflation had peaked at an all-time high. To combat these issues, President Reagan introduced a number of economic policies, including tax cuts for large corporations and high-income earners. But did these policies actually stimulate economic growth or improve circumstances for Americans? Jonathan Smith investigates.
Lesson by Jonathan Smith, directed by Gavin Edwards, Movult.
Support Our Non-Profit Mission
----------------------------------------------
Support us on Patreon: bit.ly/TEDEdPatreon
Check out our merch: bit.ly/TEDEDShop
----------------------------------------------
Connect With Us
----------------------------------------------
Sign up for our newsletter: bit.ly/TEDEdNewsletter
Follow us on Facebook: bit.ly/TEDEdFacebook
Find us on Twitter: bit.ly/TEDEdTwitter
Peep us on Instagram: bit.ly/TEDEdInstagram
----------------------------------------------
Keep Learning
----------------------------------------------
View full lesson: ed.ted.com/lessons/does-trick...
Dig deeper with additional resources: ed.ted.com/lessons/does-trick...
Animator's website: www.movult.com
----------------------------------------------
Thank you so much to our patrons for your support! Without you this video would not be possible! Helen Lee, pam morgan, sarim haq, Juan Pablo Rodriguez Morales, ANNE FINE, Gerardo Castro, Siddharth Toshniwal, Michel-Ange Hortegat, Enes Kirimi, Amaury BISIAUX, Aravind C V, ND, Samyogita Hardikar, Vanessa Graulich, Vandana Gunwani, LvL042, Abdulmohsin Almadi, Andrew Brodski, AJ Lyon, Anandha Krishnan, Geoffrey Bultitude, Mi Mi, Thomas Rothert, Christopher McVay, Carlo Solaroli, Javier Aldavaz, Ivan Yeung, Brian Elieson, Grayson Garbarino, Oge O, Weronika Falkowska, Stefano Esposito, Nevin Spoljaric, Yvonne Feijoo, Sid Chanpuriya, Arjay Arcinue Dineros, Anoom Yasmin, Anoop Varghese, David Yastremski, Noah Webb, B, Erica Guerrero, Roberto Chena, Oliver Koo, Luke Pisano, Andrea Gordon, Aleksandar Donev, Nicole Klau Ibarra, Milo Vermeulen and Ryan Weiler.
My Grandfather taught economics, and I'll always remember him saying "Money is like manure. It makes thing grow when you spread it around, but if you keep it in a big pile it only stinks and attracts flies."
like attracting thief
True, true
agree！
That's a great analogy
People who believe in trickle-down economics are fond of saying "You can't multiply by dividing." Of course, anybody who has ever studied biology or grown rhubarb knows how wrong that statement is.
I'm curious what your opinion is on the Fed's use of political subterfuge to want to convince us that the interest rate needs to be cut despite the increase in job stats? Should I stay in the market? I've gained more than 80% since the earning season.
It's true the market is not rational, but on average, market forces will often push stocks toward the direction reflected by economic parameters. I suggest you keep doing what you're doing. An expert could also help you keep a more watchful eye on the trajectory of things.
Yes, you are right. Things could take an acute turn, so you do need a watchful eye. I had similar experience in 2020--2021. I got too relaxed, but when the bear season came, I dropped significantly. Since then I've relied on an FA to do most of the market research, and it's provided significant hedge and profit for me.
That's great. I've had long plans to hire an FA. Any chance you could recommend who you work with?
I suggest sticking with one who understands your goals. I'll personally recommend Sharon Louise Count because I work with her and you could check her website out, but I'm sure there are other good ones, too.
People who believe in rewarding savers must wear punishing the borrowers on their sleeves. It's not "tax the rich" in "redistribution." But a prevention of banking fraud.
For example, a speeding ticket is not meant to fund the government but a deterrent fine.
Building a space hotel is trickle-down economics.
Building investors overpriced vehicles first to fund the working class's vehicles second is a catch-22 bad math and not logical. Because rewarding savers is punishing the borrowers. It doesn't trickle-down. Rewarding savers by punishing the borrowers by only building them taxis and not cars to own.
Providing an affordable car to make investors happy" is an oxymoron. And we have already named this failed (Catch-22) math formula trickle-down economics.
Taxis are more profitable to investors. And the people doing all the work dont get a car to own. To say it in a overly dramatic way, "I wouldn't put it past them to rent the shirt on my back, in trickle-down economics".
If one is gonna be about rewarding savers, then they must wear punishing the borrowers on your sleeves. And just admitthey have no interest in building the working-cass a car.
I believe Henny Ford turned down pampering the rich and decided to build a car for everyone.
In some countries, "trickle-down economics" is called "horse-and-sparrow economics". The idea is that when "grains" (money) is fed to "horses" (the wealthy), the "sparrows" (the poor) have to wait until the "horses" poo it out.
And the horses more or less always have constipation, so even when the sparrow does get his share... its tiny little blobs of nothing!
Us poor lil sparrows
working hard for horses’ poops 🙈
May I point you to these 2 videos regarding "trickle-down economics"?
ua-cam.com/video/kgcx9M2woXw/v-deo.html
ua-cam.com/video/9gUZOuA4_4M/v-deo.html
Warning the first one is almost 2 hours long. The second one is just 14 minutes long.
The math formula is griffin goods supply and demand math chart.
AKA supply side economics.
Griffin goods are investors trespassing in must have items.
Whereas in Normal supply and demand math chart, The math states the paying customers' demands.
Math is used to predict outcomes.
Investors are turning the normal supply and demand math into griffin goods supply and demand. AKA supply side economics. AKA Trickle-down economics
What does the math of normal supply and demand state what to do with the margins on the left side of the chart? (The math is stating the paying customers' demands) These margins are earmarked for the product to capitalize. Not the owner to capitalize. Do you see the switch-a-roo.
(The math is stating the paying customers' demands). This is the opposite of supply side economics, AKA trickle-down economics.
This is the Glass Steagall legislation. To separate "investment bank front normal banking
The griffin goods supply and demand math chart is named trickle-down economics.
Trickle-down economics is the name of a math formula. The math formula is a griffin goods supply and demand math chart.
Reaganomics also resulted in a lot of deregulation. In my opinion, the modern day issue of corporations being powerful enough to do whatever they want is a result of those policies.
No, regulation is a tool used by corporations to class out small businesses. Regulations lead to more monopolies
@@brennanmason1973 It's cute you think 'Regulations' is a single catagory you can assess in this way, as though all regulations are equally valid or inconvenient or whatever....
Jimmy Carter oversaw more deregulation than Reagan.
@@brennanmason1973 ...it actually goes both ways, and in the US today, deregulation happens to benefit corporations and hurt small businesses, while regulations are made to hurt small businesses and help corporations. We literally love in an oligarchy in the US today, and no expert on the topic would argue against that fact. Republicans and Democrats represent corporate interests, and the few, less than a half dozen, Democrats that actually represent the people and not corporate interests (no Republicans do anymore), are claimed to be communist and left extremists for not representing corporate interests. Funny enough, those few also push for policies that have been proven to work in other countries, and actually reduce the cost of living for the people, and Conservatives in both parties claim those policies are unrealistic and far left, when it's so normal in other modern countries that no one would dare threaten to take them away, because it would end their political career.
That really says it all actually, corporate interests are so represented in the US that the people get zero representation, and other countries think Americans are the dumbest people in the world for allowing it to happen.
@@nidodson How does deregulation help corporations and hurt small businesses? Regulations cost money, Big Corporations can afford expensive regulations while smaller businesses cant. Lets take 2 cookie stores, Crumbl Cookie a big cookie company and Mom And Pop Cookie store, the FDA puts in a new regulation requiring you to send in 1000 batches of cookies into their labs for testing every day, Crumbl Cookie can afford to send all their resources and money to do that but the Mom and Pop cookie store that has even better cookies cannot afford thousands of dollars to do that every day. Putting Mom and Pop Cookie store out of business while Crumbl has less competition
"You can't set a bar to a person's richness.
But there definitely should be a limit to how poor a person can be."
~ Manish Sisodia, Education Minister, Delhi
Well there kinda is.
@@CapAnson12345 how so
An Indian policymaker is not a good source for speaking about money and wealth
India isn't a model for helping the poor
@@jeryljoseph1 exactly
I have a joke about trickle-down economics but 99% of you won’t get it…
Please share it. Don't be like those 1℅ers.😉
Every villain in a movie thinks they are the good guys.
Star Wars; "The taxation of trade routes to outlying star systems is in dispute". The nobles want their taxes.
The little Mermaid; Ursula HELPING the "poor unfortunate souls, But you'll find that nowadays
I've mended all my ways
Repented, seen the light, and made a switch". It's Ariel's fault for breaking the contract. Ursula is helping Ariel.
The sociopaths believes the worker's building their own apartment buildings to rent is helping them. The poor unfortunate souls have a job building yachts.
😅😅😅😅😅😅😅
It’s called trickle up economics
When life feels like a pyramid scheme
As a government, it makes exactly zero sense to cut taxes for the extreme wealthy rather than the poor/working/middle classes; the extremely wealthy are the biggest source of taxes by raw amounts, so it only makes logical sense to take more as a percentage from them (from the pov of a body that needs funding). No matter how much the government tries to scrape dry the working class, it won't net much funding for government activities because they simply don't make as much.
Moreover, the poor, working, middle, and even professional/upper middle classes spend much more of their incomes than the wealthy, and contribute more of their money back into the economy, where it will inevitably 'trickle up' to those at the top anyway. Cutting taxes on the poor helps everyone at the higher levels, cutting taxes on the wealthy has little real-life effect on anyone (including said wealthy). When the economic costs of engendering poor(er) quality of life for the major fraction of the population are factored in, the idea becomes even more irrational, especially if the government is truly concerned with cutting costs as it (falsely) claims.
The politicians do this so the rich support them and their party or because the rich just bribe the politicians. For the state it makes no sense to cut taxes for the super rich. But for the individual politician who gets big benefits, it makes a lot of sense.
Correct! But how would the Philippines do this when the president elect themselves won't pay their taxes?
Wonderfully said!
It's practically impossible. There are a million loopholes to move money around, which can only be closed by ending globalisation. If you get greedy and tax more you just end up getting nothing. All the social programs you see in Europe are paid by the average people, through many types of taxes. The European millionaires simply stash their money in the Cayman Islands or Liechtenstein. As any economist would tell you, nobody paid the 70% tax in America, but they started paying more when the rates were reduced. Anything above 35% is absurd and unfair, no matter how much money one makes.
Wrong,all you said is "they have more money so tax them more",they can just take their business elsewhere,it's a free market they can stop all their business in the US and go to the EU or even China.Cutting taxes in general is good specially since the government is a bad investor,they only lose money and don't care about profits while the rich do.The middle-class won't invest back in the economy like the rich that's why it's more important to cut taxes for the rich.
An alternative solution to this is to heavily tax the rich if they hoard their wealth, and give them close to no taxes at all if they invest it. THIS is how trickle down should work. But nah, politicians be like "the billionaires are honest people, they will invest willingly on their own"
"they will invest willingly into politicians pockets to get more." TAX THE RICH
ALSO, IF I WERE A BILLIONAIRE OR A MILLIONAIRE AND YOU WERE TO HEAVILY TAX MY CORPORATION, I WOULD JUST MOVE THE BUSINESS OPERATIONS TO ANOTHER COUNTRY!!!!!!!!!! WHICH IS EXACTLY WHAT HAS HAPPENED IN AMERICA, AND MORE SPECIFICALLY IN CALIFORNIA!!!!!!!! :D :D
Actually your idea is good but it has a loophole rich will just invest thier money into thier company by purchasing thier shares or somehow making it look like they are investing to get thier money back into thier pockets literally giving us 0 taxes
@@alezrandom4146 Technically they just declare paying taxes in foreign countries. The thing is, americans citizens living abroad must pay american taxes even if they already pay foreign taxes. If the governement can do that to the normal people it SHOULD be able to do the same with corporations. But nah...
@@kieranrollinson8750 No, if your company is worth billions or millions you wouldn't be taxed, since your company is an investment. If you hoard your money as a private person however, that's where you'll have to pay.
Give a company Billions of dollars to improve and grow, and that company will use that money to pay off their shareholders and buy back their stocks instead. Tirickle down economics is a buzz word used to confused the people at the bottom.
I feel like cutting taxes at the BOTTOM would help the most people. Losing 30% to income tax at minimum wage hurts. But even 70% if you’re making billions won’t result in an empty stomach
The bottom 50% already barely pay anything.
@@jonnyw82 if you’re only able to scrounge $5000 a year, it’s still $500, which is a LOT when you’re already not living on much. No, $500 isn’t a big deal in the grand scheme of things, but it can be a huge difference for someone struggling.
@@DoctorX17 30% is fairly reasonable if it is used correctly. In Sweden, that gets you affordable healthcare for example, with a yearly limit of $100. You never pay more than that for healthcare. Medication is also subsidised, so no one has to pay several hundreds of dollars for essential medicines. If you still don't have enough money, you can request economic assistance from your municipality.
The USA could accomplish a lot by simply reallocating tax money from the military.
The US has graduated tax brackets as well, so the top bracket being 28% doesn't mean 28% of your income, it means 28% of the amount ABOVE the bracket cutoff.
So for example, if you move from a 10% bracket to a 14% bracket with a cutoff of 40,000, you're paying 14% of the amount ABOVE 40,000, and 10% of the rest. If you make 45,000, that's 14% of 5,000 plus 10% of 40,000.
So high graduated tax rates sound a lot worse than they actually are mathematically speaking.
@@kingflumph5968 yeah, I don’t think it’s so terrible when you’re in the $35k+ range - it’s worst for those who live with only a few thousand a year that even 10% really hurts
Some mention of companies buying back their own shares would have been nice to explain why tax cuts to corporations are largely ineffective.
Disallowing corporate buybacks is how hostile takeovers happen.
@@SphincterOfDoom Excuse my ignorance, but what do you mean by that?
@@eyallevin6302 If a company can't buy its own shares back from someone, eventually another company can buy that company's shares and then take ownership with impunity.
Trickle down economics has been a failure since it became a thing about 40 years ago. The economic divide between the classes are much more severe compared to the 1970s and early 80s.
Trickle down economics is not a real thing. The issue has all ways been the federal reserve/ government inflation policy and government central planning killing the division of labor.
what's the formula for trickle down economics? I want to test it
@@icancounto9994 what're you talking about? Trickle down economics is a phrase that describes the act of giving tax cuts to big corporations in the hopes that they reinvest that money Into job creation. This has been a massive failure
@@grimaffiliations3671 Go ask any real economists and you will be laughed up. No what doesn't work is government central planning and the federal reserve banking system that Regan never fix. Regan never fixed welfare state or practice deregulation for everyone.
@@icancounto9994 you clearly dont know what you're talking about. Tax cuts for the rich in the hopes that it would promote job creation has always been a conservative belief
Literally the only possible way this could work is if you reverse it. If you give tax breaks to the poor and middle class, (who are also the majority percent of consumers) then they have more money to spend and therefore put into the economy. The rich would still be making money since people would probably buy and invest more from them. The only thing that would be different is that companies wouldn't be able to cut corners since people might focus more on quality products rather than what's just the cheapest, which is actually a good thing as it'll probably lower practices that are bad for the environment or workers. It really should be trickle up economics.
The best thing still is just to give the people more for their taxes. If your taxes pay for your healthcare and your education, you don't need to spend money for that, so you can spend it elsewhere. That's how other countries like Sweden and partly Germany do it.
@@solar0wind oh yeah absolutely. I'm just speaking specifically on the idea of "trickling" money. To me it's idiotic that people belive it actually works and it makes no logical sense that it would. It's clearly just a power grab made by rich people and for them.
The problem with your theory is the poor pay no federal taxes and the top %10 pays a majority of all federal taxes.
@@ronniesautodiy5992 you still have the middle class to account for. The poor obviously can't pay them anyway and the rich can afford it, however you still have the middle class to account for. It's like this because trickle down obviously doesn't work. Individual states keep trying to implement it and it fails every time.
but if rich people were smart they would invest their money (ie irickle it down) so that the government would not increase tax rates back up.
Trickle down economics relies upon the concept of what Andrew Carnegie called "philanthropy", essentially charity on such a large scale that singular interests can radically change the daily lives of neighborhoods, cities, or even states and countries. The issues with this theory is that it relies on all of that money amassing into a singular point in the first place, rather than diluting across a company or even the entire world market, as well as that singular interest point being interested in "dying poor", as Carnegie put it; something he himself was not interested in until he was almost dead anyways. Neither of these are reliable or even particularly likely as factors of wealth distribution or economics. Amazon isn't going to just sell off all of it's stock and empty it's bank accounts to feed trillions of actual money into the economy out of the good of it's non-existent heart, it's going to give the appearance of doing such so the good publicity makes them back more money than they spent for their existing shareholders. It's advertising, not philanthropy.
Nope, it relies in the fact that when companies have more money they can spend more, creating new jobs and paying their employees more
@@wagnergauer9133 💯 some people just don't get that
Read up on some taxfoundation u need it
@@wagnergauer9133 "Can" and "will" are not the same thing. A company "might" use that money to hire more people, but there are any companies that are more willing to spend that extra money on huge bonuses for the executives. Heck, some will make record profits and still lay off a large chunk of their work force in order to make the quarter even more profitable. That's what happened when the company Blizzard announced hundreds of layoffs after announcing record profits.
@@foxymetroid in the short term it might seem like something good for the executives, but if those were good employees, the company limits their future growth.
It's hard for a company to find employees in the labor market when their entire competition has extra money.
The less companies are taxed, the greater is their incentive to hire more people and expand.
They can afford not to pay employees well, up until most of the people are not employed.
After that only companies that compensate people better are able to expand, as more people are willing to leave their current job to work for the other company.
So:
Companies that are willing to pay people more than the competition (if efficient with capital), grow and employ more people.
Companies that are not willing to pay people more than the competition shrink, lose employees to others, and employ less people.
Rich people will say it works for obvious reasons. Whether it works for the rest of us or not it benefits them whether it's true or not.
rich people are the ones paying politicians, news anchors, social media ads. it’s very sad, i think most people in red states have succumbed to their propaganda
It works.
@@robertortiz-wilson1588 For them!
@@GenerationX1984 wrong not just them.
@@robertortiz-wilson1588 Nah. It works for JUST them.
Three important things to note
1. The laffer curve assumes no deductions. (Nobody knows where the peak is and this is basically why)
2. Where the top tax rate starts effects the theory making it more true the earlier the rate starts
3. As seen in Ireland (and basically every other nation but the US) cutting corporate taxes is usually way more effective than cutting income taxes
I'd imagine tax haven policies work comparatively better for smaller population countries since the benefit of a lower tax rate to a foreign corporation or rich individual is not dependent on population whereas an increase in taxes is directly related to the population size. Not an economist though so idk.
"cutting corporate taxes is usually way more effective than cutting income taxes"
Effective at what? Increasing the wealth of the already Ebenezer Scrooge-esque billionaires?
@@pressftopayrespects6325 Less taxes for corporate, more people can then be employed,
Govt would gain more tax revenues from working class instead, this also lowers unemployment & crime rates.
Most importantly, this policy attracts more individuals (& ones overseas) to come & start up businesses, creating even more jobs.
@@user-kj2fj8qr9l No, it's because the tax burden of corporate taxes is just passed onto the worker or consumer anyways
Well it's pretty effective in starting riots.
The problem is still corruption and loopholes when a multimillion company can lobby government and after a year of high revenue doesn't pay what it should because they hide it on accounting the regular people ended up paying (also they will apply for a bailout when given the opportunity)
Capitalism...
Workers' front no. It’s not capitalism. It’s all due to deregulation of corporations. This is when unions started to disappear and the disparity between poor and rich started to appear. Capitalism works under the correct regulations.
More complicated than that, a mix of the IRS being under powered and legal money laundering
So their money should go to noble causes the US government follows? For instance, genociding Yemen?
Look at it from a gambler's perspective. You know that corporations are actively competing with each other for your money - you refuse to buy their product, they cannot force you to pay. You know that the government will strong arm you out of your money if you refuse to pay.
You could give your money to corporations and they *might* hoard your money (they have a financial incentive to build their business, so hoarding it would be foolish). Or you give it to the government and they will miss-spend it (the tax rate remains consistent at the President's control, they will arrest you if you refuse to pay).
Who would you rather your money goes to?
@@MB-dk6hk oh yes, we all know those great corporations like Nestlé and mars who used child slavery, or Tesla which uses just child work and wanted to support coup in Bolivia, or Amazon who doesn't allow their workers to go to the toilet.
The main issue is that most actual economists who are in favor of tax cuts never use the term "trickle-down". Taxes in general are exceedingly complex for various reasons, but in terms of maximizing tax revenue no real economist is going to argue about too low or too high of a tax rate will lower the tax revenue. The real question becomes where that point is going to be?
Of more interest is wealthy people don't spend or invest the money they get then shouldn't we see deflationary pressure? Effectively large amounts of money are taken out of the economy if it's just being hoarded which doesn't make the area richer in terms of dollar amount, but it would make the dollars everyone has worth more and effectively be giving everyone a pay raise. The most important part of making people richer isn't the number of digits people own, but how much time it takes a person to own enough to say buy an apple.
There’s not enough rich people and saving from rich people for a strong enough deflationary pressure to affect society. The #1 problem w trickle down is that rich people do not invest their money that maximizes social welfare. They invest in tax litigators, they spend a lot of their money overseas, and w a low corporate tax rate, their financial investments never have any impact on the labor force of those companies. They’re essentially handing money to a company’s board of directors who *may* increase the wages of the labor force if they’re feeling good that day
What they leave out is that most intelligent rich people eagerly invest all the time. An increases their wealth while also giving the Investments big and medium sized businesses used to expand, innovate, or even start up new ideas.
@Robert Ortiz-Wilson I don’t know anybody like that.
From the start, I always called this policy “trickle on” economics. You’ll always get a better return on tax revenue by cutting taxes on working people. They tend to spend the money locally in grocery stores, car dealers, etc.
no
Noel Lundström how not?
Wouldn't cutting taxes for the working class (poor people) be the opposite of trickle-down economics, which is cutting taxes for the rich? I believe the policy you're talking about is called "trickle-up economics"
They did lower taxes for working people.
The example image (glasses stacked on top of each other) is INCORRECT in present day scenario. When the rich make money (by selling stuff inside US), they stash their profit in tax heavens abroad. So, the Top- glass is not on top of the lower glasses but actually in another country. The little bit of trickle down that does happen is when they have to pay (maids, estate managers, etc.) to maintain real estate in the US. I pity those who still beleive in trickle-down economics.
The issue of taxation is extremely complex. Tax brackets are already based on income; however, tax laws allow the uber-rich to pay a lot less than they should . Therefore, eliminating loopholes and tax breaks would be an easier way (possibly) of eliminating the unfairness we see nowadays. And it's not just the poor vs. the rich. Middle class people pay more taxes than the very rich, yet none of the comments I've read here address this issue. It's a lot easier to tax someone who gets a paycheck every month than somebody whose income comes from a variety of sources. Besides, the rich can often borrow against their assets without having to touch their own wealth, which "regular" people cannot do, thus making it easier for the super-wealthy to appear less affluent.
Humans are driven by incentives.
Trickle down economics doesn't create any incentive for high net worth individuals to spend a more than they are already spending.
Hence it fails on a basic principle of humans and incentives.
I doubt it's a matter of spending on consumer goods, but rather investing in businesses. Don't see why it shouldn't be an incentive
Nothing can trickle down if the cup at the top can hold an infinite amount.
@@deependuajish : The wealthy elite are the single greatest strain on the worlds economies because they take vast amounts of money *out* of circulation.
Unless you're a billionaire, you just proved you hate yourself and everyone else who isn't a billionaire.
@@deependuajish Investing in businesses generates a return factor that spending doesn't. And that return factor leads to money flowing back up to them over the long term.
@@JindraAG so it doesn't matter if an economy as a whole does better if the rich gets richer? You'd rather the rich stay the same or even lose money rather than see the economy as a whole develop? Unless you're saying the economy doesn't benefit at all since ALL the money goes back to the rich so essentially everyone else remains poor. If that's your argument, I have nothing much to say.
I like the metaphor of the wine glass on top growing to avoid trickling down on the lower ones, but it's missing something...
I know, the bottom glasses should shatter under it's weight. Then it would be accurate.
You didn't mention that there were 7 significant tax increases from 1982 to 1993 which might account kinda offsets the 1981 tax cut by Reagan.
I believe all those increases we on the middle class ua-cam.com/video/-b1ePD_Hi_w/v-deo.html
When you talk about trickle down economics but you don't talk about government spending you miss the largest point about the theory. In America we have a government spending problems not a government funding problem. Trickle down works when government stays within the bounds of the constitution and spends only what it takes in. The largest problem we have in trickle down economics is that most if not all trickle down benefits are eaten up by inflation in the long run. Inflation is entirely a function of deficit spending other wise known as government borrowing.
@@trackingthecoreofstuffandm2310 Where do they borrow the money from, genius?
@@efw-vz4hc the central bank. but who controls the central bank? The government
@@trackingthecoreofstuffandm2310 AND WHAT IS IT THAT THE CENTRAL BANK DOES???? THEY PRINT MONEY!!
@@efw-vz4hc yeah which the government controls with a legislation
@@trackingthecoreofstuffandm2310 in practice though, the deficit is made up largely by printing money
Short answer: No
Long answer: Still no but the rich will spend billions convincing you the answer is really yes
Outsourcing makes it a pointless debate
Ye well the Trump tax cut was actually the reason why unemployment for minorities decreased
Employment increase, tax revenue increase, standard of living increase. But of course inequality increase as well but just because JK Rowling make more money than me mean I have a lower standard of living. Tax cut work. You are wrong
@@johnmaris1582 tax revenue increases then decreases with rate cuts,and economics is not maths or science that will give you almost certain answers.
It is all coulda shoulda & woulda usually taken by weaker students(who are prone to indoctrination as they are incapable of seeing the big picture)
@@johnmaris1582 tax cuts for the poor work, their wealth would increase, meaning they would spend more. Tax the rich more.
it's odd that this should even still be debated when history, common sense, and statistics all show without exception the lower class should get a tax break.
Everything should be debated. Moreso if it's obviously true. Common sense is fallible, statistics can be manipulated and history is interpreted through the viewpoint you already hold.
@@888SpinR common sense with corroboration is how facts are made, continued statistics show patterns, and history is to be studied, which any good student will tell you, is unbiased.
Isn't the whole term "trickle-down" kind of politically loaded? I agree that taxes for everyone should be low not just for the "rich." What is a fair tax rate? How about a 15% consumption tax- 10% going to the state, 3% federally (mostly military) and 2% municipally. Then you let the federal government set tariffs to create a level playing field globally. No personal income taxes, no corporate taxes, no property taxes.🙂
Taxes should be exclusively high for wealthier people. They benefit more from the system of oppression that common people go through, so they need to contribute a little themselves or (more logically) face the wall.
@@pressftopayrespects6325 they are already pay their fair share. They pay 40% of the income taxes in this country.
@@vincentgiasullo Considering they own so much more than 40%, maybe the rate needs to increase with that.
@@pressftopayrespects6325 watch them take their jobs elsewhere that will provide them the incentives.
@@vincentgiasullo What? Who takes jobs elsewhere? CEO’s who don’t actually participate in the work their employees do?
To summarize: No, no it doesnt
Lol
Yes it does ignoramus.
@Robert Ortiz-Wilson Huey Long>>>>>>>>>Ronald Reagan.
@@jeffreygao3956 yo is that the Kaiser reich man
@@therealgaben5527 No, not Reagan.
Basically the logic: "Let's give money to the rich!! Because it will help the poor"
"The rich" are the people who employ other people. Why was the last time a poor person opened a business and hire workers.
@@CalinaLam poor people domt have the money to, silly.
That's a strawman. No one ever proposed such an idea. The idea was to give tax cuts to everyone
@@pedropradacarciofi2517 The idea was to give tax cut primary to the more wealthy ("trickle down"). It seems like backwards logic and in the end (surprise, surprise!) it did not help lift people out of poverty
@@J.5.M. Even if it didn't help, and we have no definitive evidence of that, what damage does it cause to let people keep their own money?
Especialy when we know tax hikes cause people to stop investing or consuming, wich leads to shut down industries and more unemployment?
Half of history can be summed up as "The wealthiest didn't want to share, so (fill in atrocity) happened."
I look forward to the next French Revolution.
Nobody wants to share. And if you force people to share, that's called theft or robbery.
The wealthiest didn't want to share, so 9/11 happened
That is so naive and wrong
The top 1% pays 40% of all tax revenue.
Someone please explain this to Liz Truss
It's funny that this ever became policy. "So instead of granting this relief to the people we thought we'd grant it to these college buddies of ours, so that they in turn can choose to grant it to the people or... buy a yacht, which is also fine."
It doesn't work, but it hasn't stopped Scott Morrison from using it as his election campaign centrepiece in Australia. But that's because he's a marketer rather than an economist...
Absolutely it works. It trickles down like a golden shower all over the peasants
Sad and hilarious at the same time 🥲
You know what the term golden shower even means?
@@raziasultana5222 it's kinda the punchline lol
@@raziasultana5222 I’m assuming it refers to when Zeus turned into a golden shower to impregnate that princess locked in a tower.
@@raziasultana5222 pee?
If the answer is even REMOTELY YES, then you're being paid to say it.
Its kind of like communism. In theory it works but human greed always gets in the way.
@@Overlandjon this is Capitalism. Capitalism doesn't work. It doesn't even work in theory. Greed IS the ideology.
@@Overlandjon ironic that capitalism and communism both wind up the same: oppressed by greed.
@@Overlandjon Communism is not a reality in the US.
@@TheAnthery tbh its not perfect but its the best system atm until something better comes along. Im currently working at home in my purchased condo as a 29 year old. My parents immigrated here to give me a better life from communism. My other option could have been invading Ukraine and stealing toilets because Ive never seen one but here I am in a decent country 🤷🏽♂️.
Trickle-Down Economics, in the late 1800's, went by the name Horse-and-Sparrow Economics. The saying went, "if you feed the horse enough oats, some will pass through for the sparrows." It was satire of how bad the idea was. As one of the absolutely worst fiscal policies imaginable, it's shocking just how popular it is with politicians.
This describes the model where the government injects money into the economy to stimulate it, not the idea that lowering taxes will lead to growth.
Not anymore I’m pretty sure it’s falling out of favor now
The Trump tax cuts gave the best example: for many companies the only “trickle” given to employees were one time bonuses. They didn’t rush out to expand their payroll, or give permanent raises. The vast majority took that money and bought back stocks… they didn’t return that money into the economy, they hoarded it like Smaug.
Do you know how the stock market works? Who do you think owns the stocks and benefits from a higher price driven by buybacks? Your retirement funds and individual investors.
Just see what happened in Sri Lanka
Total failure of trickle down economy
Same with the AU government lol
Trump's economy was roaring until corona came, and Biden essentially destroyed it
Stocks help companies generate jobs
There's absolutely no economic policy or tax system that can compel people to invest their surplus money back into the economy. Only need can do that.
The rich need their heads lopped off
Trickle-down economics is just a trickle-up but starting from the top.
The idea of a 70% tax rate seems mind boggling
Why would you even want more work at that point
except that the money of the extremely wealthy people and big companies don't come from their "hard work" but from their capital, and from other people hard work.
i would be shocked to see these people being taxed more than what they tax right now.
@@Shuyin781 That capital and the systems needed to make money off that capital has to be created first, which requires lots of hard work, thinking and risk appetite. If you lose your job you can get back on your feet in a few months, If you take risks to start a business and fail it will take years to recover, and failed businessmen can't just apply for a job like a regular worker.
@@akashrajkishore but if you want to be rich, between "taking your risk" or marrying someone rich, it's always the marriage that is the best choice nowadays.
Nobody becomes rich with his hard work alone now.
The trickle-down economics and the self made man are nothing but myths that no longer apply today.
@@Shuyin781 who created the jobs in the first place? Who took the risk to start the business?
@@vincentgiasullo certainly not the people currently owning their fortune and wealth
They just inherited it.
Just look at Jeff Bezos vs your average Amazon delivery driver
Bezos didn't let his tax savings trickle down, he just used it to buy a yacht that's so much yacht it got a yacht in it and needs another yacht to pull it
And he has a space yacht now too.
Yes, that's because you rewarded him for all the conveniences he brought to you.
@@XOPOIIIO he didn't give those conveniences for free
@@chideraalexanderdex547 that's why he said "you rewarded him".
@@chideraalexanderdex547Nothing in nature can be free, except social security people are stealing through taxes. But he brought it for the lowest price possible.
Thanks for sharing this with us
Last time I checked US GDP per capita was around 63 thousand dollars far higher than countries like Canada UK France and Germany that have higher taxes even better than Sweden
Just comparable with oil rich Norway
There's something called cost of living....that 63k evaporates pretty quickly when you take your cost of living into account...
@@samuraijosh1595 The places in the highest cost of living in the us, California and New York, have some of the harshest individual taxes. These states are also extremely high in homelessness, crime, and poverty.
@@jacksonray3596 your point is these highly-taxing states don't have better HDI scores?
Tax The Rich Already
Fixed: "Rob the people who do most good for society"
They're already doing that. Get out of your leftist echochamber.
Giving tax cuts to the rich is the equivalent of giving Bullet Bills to 1st place and Banana Peels to last place.
Hence why no one proposes we give tax cuts to them exclusively. The idea allways is to cut taxes across the board
@@pedropradacarciofi2517 then why do people in support of trickle down economics only seem to talk about tax cuts for the rich?
@@thesneakymemedealer5071 They don't. That's a made up strawman in order to demonize tax cuts
@@thesneakymemedealer5071 They aren't against Taxation as a whole, only against billionaires, they are however in favour of taxing the Middle and Working class.
I can’t see the linked videos / cards at the end from my phone. Does anyone know how to do that or could tell me please what the suggested next videos are? thanks
The Blue Origin shuttle at 4:11 lmfao
Trickle down economics misunderstands or ignores what being rich and poor mean in practice.
If you give a rich person extra money, they throw it on their pile of extra money. All their needs are met, so more money only goes to things they want and they usually could get anything they want without that extra money. That's what it means to say they are "rich," they have much more than they need.
If you give a poor person extra money they immediately spend it, because they need to spend it. Their needs are not all met, and they have often have debts that couldn't be paid without that extra money. That's what being "poor" is they do not have more than they need.
The reason Biden's child payment (not tax cuts but real money straight into people's pockets reliably) reduced child poverty by HALF was that that's how many people were living below that poverty line, just barely unable to afford to live. Those poor people who needed that money spent it on living, rather than hoarding it because they didn't need to spend it.
This could have been the first Ted-ed UA-cam Short.
Does trick-down economics actually work? "No." Roll credits.
Was going to write this, but here you are! =p
It's pretty funny, US has the highest growth in human history after supply side economics was implemented. We get companies like apple and software development which create loads of value for everyone. Look at Ireland doing the Exact same thing right now. Yet 99% of the comments here show the opposite remark.
More so, cutting corporate taxes while allowing those same companies to hire work outside the country is essentially redirecting that money to another country instead of our own. Those companies should be fined so heavily that they never even consider that practice again.
It Works exactly as intended
Making the rich even more richer.
Employment increase, tax revenue increase, standard of living increase. But of course inequality increase as well but just because JK Rowling make more money than me mean I have a lower standard of living. Tax cut work. You are wrong
@@johnmaris1582 dude. did you even watch the video you commented on?
@@EliteNormie They give Kansas. I am talking about Reagan. Kansas was on the wrong side of Laffar curve so they can adjust and optimise the tax revenue
@@johnmaris1582
How about instead of increase tax rate for the riches.
We should create institution to encourage the super riches to donate more of their money.
In return, government should give them the credits and the legacy, like building a road, a museum, a statue in their name or their preferred name.
Government should also create an annual award/medal for top donor. Like a Nobel prize for the top donor every year.
@@Commievn Wasn't that what Adam Smith was advocating for?
I want more videos like this one!!!! 👍👍👍👍
No. The fact that we have multiple billionaires going to space while most can't afford basic necessities is proof of that.
In 2017, the corporate tax was cut from 35% to 21%. Then, in 2019, two year later, the poverty rate in the US hit an all time low, being at 10.5%.
In my country, we are famous/infamous for having some of the highest tax rates in the world.
However, since salaries are also high, even those with the lowest incomes and those living off subsidies can feed themselves every day and keep a roof over their heads. The taxes fund free healthcare and a public education system which leads to very high social mobility. Meanwhile we have record-breakingly low corruption in the world and rank high on the freedom index.
I pay 38% every month, and I'm okay with that. I would rather have educated and dedicated professionals decide on what the country should invest in rather than having billionaires racing into space, building flamethrowers and buying twitter, all the while keeping my fingers crossed and hoping they will donate to my university or hospital if I might be so lucky.
Which country?
Where do you live?
Somewhere in Scandinavia? 😁 Perhaps Denmark?
@@saahiliyer11 I live in Denmark
@@MeMe-tw4xb Denmark 🇩🇰
why the heck would a rich company owner invest more into his employees? we're talking about Americans here, and even if not... if the business is fine and evolving naturally, most owners will want to find more ways to get more money for themselves, which more often than not is not the same as reinvesting into the company. especially the massive companies.
What this video fails to mention is how the government is already in cahoots with large corporations (ie in the form of monopolies). The government hardly "saves" its population from the mean corporations that prey on people. The government is the only business that signs its own cheques, and the spending is largely influenced by the behavior of the the people that run the government (and in turn the nation) - and what we unfortunately tend to see is laziness, wastefulness, greed, and incompetence.
I would have liked to see how tax rates impact the economies of other countries. As an example, how does Japan do it?
Not Japan but Sweden. It is one of the wealthiest countries in the world. Income taxes are around 30%. What you have to take into account is what you get for that money. In exchange for a higher taxation, we get heavily subsidised healthcare, completely free education all the way to university, subsidised medication, subsidised healthcare, parental leave, paid sick leave, unemployment benefits, and many other things.
This means that we can spend our money on goods instead. Which in turn stimulate the economy.
There are actually some small countries like Monaco which have turned themselves into tax havens for the wealthy and have become playgrounds for the super rich with most of their population being expats from other countries.
@@Ikajo Something is missing in the US's equation then - the US runs a deficit and still has a hard time with all those things you listed.
@@Ikajo You are justifying 30%... Meanwhile, hi from Denmark 😂👋
@@WestExplainsBest military could be a major factor in the American equation. The US spends more on its military than the next 12 countries combined. While other countries spend on national defense or to be a regional power, the US is the only country that spends with the intent to project power all around the world.
Is there a link to the London study?
“Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance, than an increase, of balancing the budget."
- John Maynard Keynes
For me ,one thing is certain and that is 70% tax is robbery.
Government: "hey we're doing a terrible job managing our growing country and we need more money for institutions that help the less fortunate"
Also the Government: "lmao let's stop taxing the richest people"
People don't know what taxes are, or how they work, or are paid.
Taxes don't matter when you print bunch cash out thin air.
Believe it or not federal taxes dont actually pay for anything the government does. When you pay money to the IRS, that money is simply deleted.
But how would the poor politicians get campaign donations??? /s
@@grimaffiliations3671 - literally not how it works, but ok
Proponents of Reaganomics like to highlight the increased tax revenue for every year Reagan was in office but they never seem to mention the 11 times Reagan actually increased taxes during his presidency to offset losses of tax revenue from his 1981 tax cuts.
The trickling just touched the accounting office and they recommended 👌how to keep your profits 📈. Avoid tax costs with off sure account and charity donation 😀👍donations to your local corrupt politicians
The thing is, rich people DON'T spend money, they hoard it - as they can live off the interest of savings, or invest to get returns
Which is why you NEED to tax them more than the current levels - to ensure that money remains in circulation
Economies only grow when money moves - once it stops moving, the economy recedes
@@zUJ7EjVD of course its bad
Investing the money does put it in the economy thats what investing means, giving it to other businesses.
@@aryaaswale7316 Other business as in other oligopolies. Keep dreaming if you think small business will benefit from billionaire hoarding.
this is a very good explanation
@@zUJ7EjVD they already do, but will return to New York to buy his luxuorius things
One of these days all my wealth is gonna trickle down. . . one of these days
Totally agree here
Sri Lanka enacted tax cuts in 2019 bringing its rate from about 15% of GDP to around 8%. The loss in tax revenue, attempts to maintain a fixed exchange rate, covid and a failed organic fertilizer drive meant the government had to start printing money to service its debts. Foreign reserves fell and fell and now despite a few lines of credit from India for essential goods, our foreign reserves are now at a pitiful 25 million USD. That's not even enough for a month of fuel imports. Add in a political crisis with a large movement calling for the Presidents resignation and you can understand why tax cuts might not always be good. It would've been difficult but our debt would've been sustainable if not for the 2019 tax cuts
Deen,How can I pray for you today? You are seen, Deen. You were highlighted to me! Did you ever come to know Jesus as your Lord and Savior? I feel like He is truly knocking on your heart today🕊🙏😊
trickle up economy: tax the rich, impose progressive tax on the super rich and tax their net worth, not only their income. Cut down all taxes for the not rich. This way people will spend, the government will collect money from the fortunes that are parked and the billionaires will profit from the spending of the people.
How would you tax net worth, how would you calculate it? It changes every second.
@@akashrajkishore good idea, tax it on a daily rate after markets close. To me 0.01 a day on anything above $10 million sounds fair, increasing 0.01 at each 0 added
0.01 a day on anything between 10 and 100 million
0.02 a day on anything from 100 million to 1 billion
0.03 from 1 to 10 billion
0.03 10 to 100 billion
0.04 a day on trillionaires if someone becomes one
@@igormarcos687 But that would just be taxing money that does not exist. Founders would have to slowly sell their stake in the company just to pay the taxes, and end up losing the company. No investor would invest if the government is just going to force them to sell their investment. If investment is penalized then there will be no more insurance or pension funds or retirement funds. No new company will be created and all existing companies will have to shut down just to pay this nonsensical taxes, laying off workers and abandoning projects that no one will invest in. And what about the overvalued and undervalued stocks? There are plenty of them.
@@igormarcos687 It doesn't sound fair, it doesn't even make any logical sense.
@@akashrajkishore following your logic no company should be created right now, because profits are supposed to be taxed anyways
The problem is the 1% have no reason to spend their money. Along with have worked very hard with said money to pretty much make it to where they have to give zero back in taxes. Through the use of breaks and minimal donations to charities. Which means the burden falls down unto the 99% as a result, and is causing a ton of issues due to how much the 1% are siphoning money into their accounts. While also controlling most of the markets we use and inflating them to become higher and higher in price.
Only way this will change is through a complete restructuring of our government and it's policies. In terms of what their allowed to accept from third party sources in terms of campaign donations and the like. Which simply isn't going to happen until the economy crashes and it makes the 1% lose everything they have and become a common citizen.
Imagine if the wealthy had little tax, but every year unspent money was deleted, and you could not spend money outside of you home country. Then millions would actually trickle down to the poor.
But I know that isn't what is happening.
@@minimansson2023 "Every year unspent money was deleted"
That does happen, it's called inflation and devaluation. The buying power of money constantly drops, and since money is nothing without its buying power; it is effectively erased.
Great animation in this video
Nice video.
It's hard to believe at all that the policymakers honestly believed that trickle-down economics worked in the way the rhetoric claimed it to work. It probably worked in the way they wanted it to work: It is useful for the rich. The USA has a serious lack of democracy, which causes politicians in most cases to listen more to the wealthy than the people.
I am happy to live in a civilized country.
One of the best quotes on this platform ever
It's also possible that, at the time the policy was first put forth, they figured it would work. As the video states, these cases are in isolation. And it did seem to work. But the context hasn't remained the same. Now, trickle-down economics is not analyzed based on its merits or drawbacks in a given economic climate. It's now principle. Which has led to things like tax breaks for corporations that spend x amount of dollars in certain projects or charities to encourage that spending. _Anything_ to make the idea work.
It's kind of like first past the post voting systems. It worked for its political and social climate. But we've clung onto it for so long that it's expired. Things have changed. It's festering and rotting and poisoning its surroundings. Nothing lasts forever, no matter how much one wants to pretend it does.
I think its because a lot of people got caught up in the scam that was the Reagan Revolution. Reagan tried to put his ideas into practice when he got into office but then abandoned it by 1981. He instead expanded Government which lead to the fond times people remember. Conservatives don't want to admit it because it runs counter to their idea of government low taxes (Which at this point pretty much mean no taxes) and small government. It also doesn't help that Reagan was also rich so he benefited from his own tax cuts
Employment increase, tax revenue increase, standard of living increase. But of course inequality increase as well but just because JK Rowling make more money than me mean I have a lower standard of living. Tax cut work. You are wrong
@@johnmaris1582 Tax cuts work when they are applied efficiently. Like giving a tax cut to the poor.
Tax cuts don't work when you give them to the wealthy because the wealthy don't spend money like that. Jeff Bezos isn't going to buy 3000 pairs of jeans to keep a small cloths store operating every month he doesn't have the need for it.
There's a reason why the economy boomed when people received their stimulus checks
now you guys are in a recession
@@dhruvakhera5011 Cause Biden decided to blow out our spending
@@dhruvakhera5011 if you’re talking about the US, we’re not in a recession as of 2022. High inflation, yes, but a recession is a shrinking of the economy. Our inflation was caused by drastic spending increase (by both public and private entities) post-reopening that the supply chain simply could not keep up with.
i think theres some confusion because of the name, the real name for "trickle down economics" is actually "supply side economics", the clue is in the name, the idea is to encourage those generating supply, producers, not simply people with cash, but rather people with companies that create products and offers jobs
the idea here is that with lower taxes these companies can create more products the public wants and expand operations, resulting in more jobs
of course this should be paired with a balanced budget to avoid a deficit
"If taxes are too high people will be less willing to work"
what? who?
no
Lets say theres two people, one makes 50K a year and one makes 50M a year. When you give K a 5% tax break, they have 2500 dollars to spend on their house, car, kids, spouse, etc. Thats a huge difference and improvement relative to their overall income that they now contribute to society.
Now when M gets a 5% tax cut, he gains 2.5M dollars to spend on his private yacht, insane mansion, or buy back the stock in his own company to make it so he earns 70M next year.
Now multiply this across America where its at least 100000 K people for every 1 M person in this scenario and you can see how much better spent the tax cuts are.
This tax policy and its modern effects makes Reagan one of my least favorite presidents. I absolutely hate what his economic philosophy has done for this country.
Let's be real here for a second, the tax cuts on the wealthy go to more then luxury. There's this thing called venture capital which makes people take risky bets on things like apple Google tesla Uber eats Amazon ect. The rich create these companies and invest in them (at great risk). Employing millions more that wouldve been unemployed otherwise. Just look at Ireland.
And yet during Reagan's term is when Americans were prospering so much after the poor-performing 70s.
🗨️👻
The video assumes the purpose of businesses is to provide tax revenue to the government which is supposed to provide for the people. this type of economic system itself creates poverty.
trickle down economics can work if:
you go from a position of high taxes to medium taxes, that means, you can only do it when taxes are high.
and if you incentivize people to invest and not save
"Trickle-down" is one of the most pathetic excuses to make rich richer and poor even poorer that I have ever heard.
Trickle down economics: It's a great idea until you realize that rich people don't get rich by spending money as fast as they make it. The foolish rich man didn't plan to deal with his surplus by giving to the poor, but by building bigger barns so he could keep it all for himself.
Yeah, it's been a massive failure. They never re invest the money, they just use it to buy back their own stock or give massive bonuses to their ceo's
Hello, I was wondering if you can make a video of "how does moles works and where do they come from?"
Good idea.
Hi Ted Ed, I was wondering if you could another history vs video.
History vs Oliver Cromwell. Plz
I've been an economics teacher, but the thought that's tickled the back of my brain finally solidified as a potential truism:
Those who argue that higher marginal tax rates will make people less likely to work have it completely backwards, especially now that that US middle class has been eroded: if I raise your taxes, you have to work HARDER to maintain your standard of living, especially since trying to be more frugal might actually require real work on your end (cooking at home, putting up your big house for sale and hunting for a new one, selling your expensive car). If I cut taxes, people become less worried about having to work to maintain their standard of living, and so relax.
If you increase too much taxes, it would slow down the economy. People will save more rather than spend.
"In short, the money did not trickle down"
Something trickled down, but it certainly wasn't money.
If trickle down economics works then why does the wealth gap continue to get wider. This is the same policies that were rejected in Great Britain a few weeks ago.
The purpose of "trickle down economics" (by the way, it is a fictional term that has NOT been established by the economists) isn't to shrink the inequalities, but to promote growth. I am perfectly fine if the person that makes the pie that we share larger the most effectively of all of us is getting an increasingly big cut of it. The tide lifts all the boats and people who create the most value should be rewarded for pushing our world ahead. My country has 30 million people, yet if you got rid of only around 6 thousands of the most productive and smart individuals, the GDP would go down by half. Now what percentage of the country total income do you think these people deserve? Regardless of how does it make you feel, the only fair answer is 50 percent.
@@janr.9192 The pie is getting bigger, yet part of the pie that normal people get is getting smaller.
Also who do you mean by those "6000 of the most productive and smart individuals"? (also GDP sucks for many reasons)
Oh it trickles alright, it starts in the bladder and then it---you know the rest.
Ted-ed is quite possibly one of the most based channels I have ever seen, and this has not changed since I first found this channel when I was 8 years old
"Ted-Ed continues to confirm my biases since I was in middle school, and as a result I haven't learned anything new"
imma be honest, my perspectives have changed and I now see that Ted-Ed was unfairly biased against Stalin, Mao, etc. You are correct in that regard, and I've certainly changed as a person.@@SphincterOfDoom
How was it unfairly biased against two of the biggest mass murderers in history?@@fsexplorer9727
No tax policy works in isolation. The examples that this video cites are where policy makers room this idea to the extreme.
For example, this video cites an example of how a state cut taxes and went broke, and implies that tax cuts don't increase tax revenue. But it conveniently omits the fact that tax revenues increased every year when Reagan was in office (look it up). The top marginal tax rate when Regan took office was around 70% and he lowered that to around 30%, and yet it led to an increase in tax revenues.
The only thing that upsets people about supply-side economics (and capitalism in general) is income inequality, and that is certainly an "issue". But these tax cuts are what led to all the good things that the video mentions in the beginning. Everyone has a higher standard of living today than they did in the 80s. Sure, some people got mind bogglingly rich, but in absolute terms, everyone is better off today.
Trickle down economics does not work. It’s almost entirely responsible for the destruction of the middle class.
@@Joe-gw9wh you didn't respond to anything that I laid out
Interesting. This sounds more believable to me.
Actually, the only way I see it is the opposite which is an extremely high net worth tax rate (like 50%) people with a total net worth of over $10 million. The middle and lower classes maybe pay a 2% total tax rate including everything else.
That would sure be the dream, but unfortunately 2% taxing the middle class would also make us go bankrupt
But are we taxing exactly what? Rich people don't have their incomes in the same way as us. They have investments, stocks, art, companies, etc... Things with a value that can change everyday...
If the billionaires and millionaires are a fan of trickle down economics, that's all you need to know to deduce that it's bad for everyone else
Maybe first try to become one.
Poor people spend a bigger percentage of their earnings for living. That's what makes an economy work. Give the poor slice of the population enough money to start having disposable income. They won't disappoint.
Why poor countries don't do this?
@@JK-gu3tl countries are run differently than households. Countries always live beyond their means (like poor households).
But what I mean is, if rich people make money they spend it on investments to make even more money. In other words, they hoard their wealth.
Poor people spend most of their money, if not more than what they can afford, on basic living items.
So if a government wants to pump money into the economy, it's smarter to give it to people who will buy food, support local businesses etc than on rich people who will just cling onto it, like they do with most of their money.
Why do we think that those who underpay their housekeepers would use their money to support local businesses?
I belive its diferent for every country. I get that in the US, Higher taxes may not slow economic growth. But in smaller countries like Portugal or Ireland, that have low population and low intrinsec economic active, they NEED to have extremelly competitive tax systems to atract money from the major economies.
If those smaller countries had higher taxes than the US, why would Americans Invest in those economies?
Im from the line of thinking that taxes should be high on individuals, but still fair. With the very few shelfs of income tax and high VAT for any non essencial. This is a regressive system of taxation. Taxes on consumption are the "fair taxes" and those more prevalent on nordic natrions. If you are Richer, you can spend more, therefor you pay more VAT, but still, as your income taxes are lower than in the US, you are still atracted to be there, spend there and generate other taxes there
I don't belive that tax cuts on the rich will ever convert in prosperity for all, but, an higher percentage of nothing is nothing. Therefor you have to have incentives for those rich people that see their income halved by taxes to stay in the US and not just Evade taxes. *Paying taxes has to be the lower resistance Path*
Its a balance. Wich level of tax would be aceptable for them until not paying taxes becomes easier or cheaper for then.
I would love it if you provided sources
A form of progressive tax policy would be that if a business’s tax is cut by 30% then the money “saved” needs to be invested in the company (whether through bonuses to non-executives, salary raises, benefit improvements, or even facilities modernization). But no tax cuts ever demand that from companies. Instead, stock buybacks are the rage and bonuses to the C-Suite far outweigh any tangible benefits that employees get.
Here in India we have Corporate Social Responsibility (CSR) wherein if a company has profits above a certain limit they have to spend 2% of those profits on social welfare. Are you talking about something similar?
Does trickle-down economics actually work? For the poor no. For the wealthy, yes. Saved you 4:38 mins.
So the answer is just NO. Right? Because if nothing actually "trickles down" to the poor, the "trickle down economics" didn't work.
Could something like this work? Cut corporate taxes, but increase wages/salaries for all employees by the same percentage as the tax cut. What are the potential pros and cons of this?
it all comes to down to complex circumstances and decisions and such. hypothetically (and ideally) yes, the 1% could raise wages and spend more money to put it back into the economy and get the blood flowing again. but that doesn’t always happen. like the video mentioned, kansas tried that in 2012/13, but the wealthy just greedily hoarded the money in their bank accounts, didn’t spend or pay employees any extra money so nothing really positive happened, the poor got poorer the rich got richer and the economy had less and less money. the money did not trickle down and so the economy wasn’t reinvigorated the way it was supposed to be, it just totally tanked. the biggest pro is that when it works, it works great, the biggest con is that it is a MAJOR gamble, you either fix the economy or leave it in ruins and there’s no real way to test or predict the results of economic policies like this.
it doesn't work because people try to make as much profit as possible. they keep the extra money, they dont use it for others