(These are not my original thoughts but I believe them to be absolutely true. I realize most people here aren't interested in this, but I think here they will gain more visibility to the normal folks) Can anyone tell me the root of trickle down economics theory? Who thought it up? Who has put it into practice? Is cutting taxes on the rich all that it is? The answer is, there is none. You will not find it in any economics book, or in any papers written by economists at any time in history
The truth is no one has ever implemented trickle down theory because it doesn't exist and never has. Not Bush, not Reagan. It's a classic straw man that's often trotted out when someone proposes tax cuts Not just to the rich, but any tax cuts that include high income earners.
When people say "they told us it would trickle down, but it hasn't" I have to wonder, who told you that? It's often attributed to Reagan, but you will never find any record of him saying so. THat wasn't his intention with the tax cuts he implemented.
The problem is that the intended goal of the tax cuts often attributed to trickle down has nothing to with trickling down at all, The goal of cutting taxes is to increase tax revenue for the government. If there's any trickling going on, it's trickling from the general population into the government
now hold on... How can cutting taxes INCREASE tax revenue? Well it has to do with the behavior of people when their tax rates are too high. In 1933 John Keyes, the economist responsible for Keynesian economics, a model that is the basis for a lot of what our current president bases his policies on, said this. "taxation may be so high as to defeat its object,” that in the long run, a reduction of the tax rate “will run a better chance, than an increase, of balancing the budget.”
This idea has proved itself correct four distinct times in American history. The Mellon tax cuts in the 1920s under the Coolidge admin, revenue tax act of 1964 under JFK, Reagan tax cuts, Bush tax cuts. These cuts were not just tax cuts on the rich, but across the board tax cut policies and in every single instance, raised the tax revenue that the American government took in. The theory is that when taxes are too high, people, rich and poor, do their best not to pay them, and spend less. It has nothing to do with trickling of any kind from top to bottom.
The republicans believe that the rich are disproportionately taxed. Whether you agree with that or not is irrelevant. The point is that none of them believe that money trickles down because of lower tax rates on the rich. They believe that tax rates are at the point where revenenue could be increased by cutting them. Whether you believe that is true or not is again not the point. I'm just trying to get you to understand the intended outcome of tax cuts is not trickle down.
So Next time you hear someone fighting a battle against a non existent theory or policy (you will undoubtedly in the next 2 years) Realize that what they are fighting something that has never existed.