What is the evidence that trickle down economics actually works?

[Ted King]

The Republican (Ryan) plan that passed the House is supposed to be a plan to balance the budget, but it contains tax cuts. How could cutting taxes help balance the budget since less taxes would mean less revenue? Standard Republican answer: Tax cuts stimulate more economic activity and therefore lead to more net revenue than the "face value" reduction of revenue due to tax cuts. IOW, trickle down.

This idea is clearly an article of faith amongst a large percent (probably a large majority) of Republicans. But is this faith based on actual empirical evidence? I don't see it. Can someone provide the empirical evidence to back up that claim?

[Seacrest]

>> What is the evidence that trickle down economics actually works?

I'm wet?

[john dough]

I would like to see what people who defend this fantasy theory have to say.

Here is a VERY thorough evisceration of said theory:

http://www.youtube.com/watch?v=63LrW-0Cv2M

[Acer]

It would work if it weren't for those meddling Democrats!

[Grace62]

http://www.econlib.org/library/Enc/Suppl...omics.html

This is a pretty concise argument for why supply side economics have been successful over the past 30 years, based on this author's definition of success.

That's the thing, when you ask where's the proof that it works, the question is, works for whom? It clearly has worked extremely well for the wealthiest citizens, who pay less in taxes than at any time since the 1950's. This author assumes, like other supply-siders, that all GDP growth is automatically good for the poor.

It ignores what has happened to real wages, particularly in the 2000-2006 period.

[Chakravartin]

Here's your evidence!

http://tinyurl.com/2f43ajd

[$tevie]

Here's an interesting perspective:
http://www.nytimes.com/2007/04/06/opinio...tlett.html

Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances. No longer do its advocates in Congress and elsewhere confine themselves to cutting marginal tax rates — the tax on each additional dollar earned — as the original supply-siders did. Rather, they support even the most gimmicky, economically dubious tax cuts with the same intensity.

The original supply-siders suggested that some tax cuts, under very special circumstances, might actually raise federal revenues. For example, cutting the capital gains tax rate might induce an unlocking effect that would cause more gains to be realized, thus causing more taxes to be paid on such gains even at a lower rate.

But today (2007) it is common to hear tax cutters claim, implausibly, that all tax cuts raise revenue. Last year, President Bush said, “You cut taxes and the tax revenues increase.” Senator John McCain told National Review magazine last month that “tax cuts, starting with Kennedy, as we all know, increase revenues.” Last week, Steve Forbes endorsed Rudolph Giuliani for the White House, saying, “He’s seen the results of supply-side economics firsthand — higher revenues from lower taxes.”

The weak link in the Trickle Down chain as proposed by today's Republicans is that an integral part of the idea is that businesses, thriving with less tax burden, increase production and thereby increase jobs which then leads to lower unemployment and a work force which is in a position to negotiate better wages which means everyone has a share*. HOWEVER these current Golden Showers advocates want to bust unions, end collective bargaining, and run lean mean corporations with no intention of staffing up to the levels seen in the Good Years.

So while the original supply-side concept, at least as explained the author of the opinion piece, might have had merit, its Millennial incarnation as Cut Taxes While Cutting The Options of the Workforce is crap on a stick.

* Thus Spake Milo Minderbinder

[Mac1337]

If trickle down doesn't work, how does trickle up work? I see trickle down working everyday. I live in a middle class neighborhood. The yards are often overgrown and on occasion you see an old man pushing a beat up lawn mower up a hill. Contractors drive right by knowing full well they are not going to make money in this neighborhood. Where do these contractors and landscapers find work? In upscale gated communities with two income earners making upwards of quarter million. Oh, another one. Remember the luxury tax and boat builders?

ps

I do not need a lecture from Krugman why it doesn't work. I trust my life experiences more.

[Grace62]

Dakota wrote:
If trickle down doesn't work, how does trickle up work? I see trickle down working everyday. I live in a middle class neighborhood. The yards are often overgrown and on occasion you see an old man pushing a beat up lawn mower up a hill. Contractors drive right by knowing full well they are not going to make money in this neighborhood. Where do these contractors and landscapers find work? In upscale gated communities with two income earners making upwards of quarter million. Oh, another one. Remember the luxury tax and boat builders?

ps

I do not need a lecture from Krugman why it doesn't work. I trust my life experiences more.

Well yeah, you're right about one thing. Supply side practices and the resulting income disparities do create more low paying jobs than middle class jobs, that's for sure. And kill the middle class, as you seem to be saying. So, yeah...

[$tevie]

Luxury tax has nothing to do with income tax aside from the fact that it is a tax. It's an entirely different conversation.


Why would anybody who isn't rich waste their time trying to protect the assets of the "two income earners making upwards of quarter million" with manicured lawns even as they admit that middle class people can no longer afford to pay a high school kid to cut their grass? Someone has their head up their arse.


PS: Paul Krugman has yet to make an appearance on this thread, quoted or otherwise. Peppering a post with irrelevancies isn't going to win any points in the debate.