Posted By MrPerlishells

My take on trickle down economics. This is another way to describe interdependence. More like a joke that down plays it.There are employees, employer and client or customer. Most of us play one or two of these roles. The employees earn a paycheck from their employer. The employer profit from their client or customer. And the customer is probably employed at another company. Money moves through these roles and the economy prosper.

Income tax is like leaky faucet. Inflation is like a leaky bucket. Sales tax or VAT is like a leaky sink or washing machine. Minimizing or eliminating these leaks would make things run more efficiently.

Assuming you work for small private company without strong connection to Wall Street, then lower taxes would be beneficial for you. A tax cut on the relatively rich employer could be passed down to their employees. Any excess income can be converted to capital by investing in new equipment or to expand operation allowing companies to hire more employees helping to reduce unemployment.

If you work for a too big to fail company with strong ties to Wall Street then your company is probably taking advantage of special loopholes and mandates. Your company may take greater risk knowing it would get bailed out. When the company gets bailed out, the big boss gets huge bonuses. Employees, client and customers get nothing. Everybody pays with inflation because of the new money created for the bailout.

When talked about on TV. They allude the effect of latter and blame it to the former. That is, that the wealth barely reach the less wealthy. That's why it is called a trickle, the flow is restricted. This may only be true for the second scenario mentioned, with the too big to fail companies but not with smaller private companies.


 

 

 
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