Tax cuts to the rich is the prefer idea on how to promote and expand economic growth in supply side economics despite knowing it does not work as expected. Yet, this policy is usually the first choice in supply side run democracies like in the USA or now the UK when supply side promoters are in power.
Any policy that worsens inequality should be expected in practice to negatively affect economic growth as under extreme inequality or worsening inequality the traditional trickle down should be expected to be mute or not to work as intended. And this raises the question, tax cuts to the rich and the embudo effect, is that why the trickled down effect does not work as intended?
What do you think?
https://truesustainability.com/ART82.pdf
Am in agreement with your findings, with respect to efecto embudo.
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https://academic.oup.com/ser/article/20/2/539/6500315?login=false
Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy.
(Cited from the abstract).
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It is a question of ‚policy designing power‘ as you Lucio Muñoz mention correctly.
Stephen, good day.
I asked the question because I see the policy has been implemented in the UK and it is backfiring from the mainstream point of view, but what the critics of the tax cut policy appear not to realize that for exism movements/populism with a mask movements like Brexism or Trumpism or Brazilianism and so on implementing the policy is a win as they have the interest of the movement/the minority in mind, not of the interest of the country.... I guess a tax cut to the rich is in the works in Italy right now and it will materialize soon....
Hence, what looks like a failure of reaganomics it is a successful tool for Trumpconomics, but most people appear not to realize that even facing the majority backlash they would do it again if they can as the decision is based on ideology not on science.
Thank you for commenting!
Lucio
Are you discussing cuts objectively targeting especially the rich, or including all?
Kar, good day, Thank you for writing.
I do not understand the angle of your question.
Can you please be more specific?
Respectfully yours;
Lucio
.
Where is the evidence that supply side economics does not work with respect to inequality? In the private sector, supply side economics has been shown to work every time it is invoked. When Government becomes involved, there is economic distortion with respect to the types of programs instituted, which undermines inequality outcomes. Economies need innovators to "prime the pump" of real wealth spreading, where jobs are created, which decreases somewhat, so-called class inequality. Inequality, in the socialist sense, presumes the rich not reinvesting profits to grow business further. When there is "crony" capitalism, collusion between politicians and corporations occurs, which undermines innovation and initiative. We've seen this in the USA, where small businesses were crushed by government policies during the pandemic, but large companies were largely untouched. Undermining legitimate competition is a tool of crony capitalism, and is presently part of the so-called globalist "Great Reset".
Dear George, good day. Thank you for your comment.
If you read my question carefully, it says "IT DOES NOT WORK AS INTENDED".
Of course it works for the top high percent....
Keep in mind this is not a political question....
Can you please list the evidence/citations that you have that show that the traditional trickled down idea works, and has worked since REAGAN in reducing economic enequality?
Dear Lucio: Thanks for your thoughts. I've thought about your reply, and conclude that Economics cannot be separated from Politics, as Economics, in the modern definition, (Enlightenment, Marx forward) gave birth to politics, as we now know it. All politics as is practiced now is derivative of diverging economic philosophies. The goals of Enlightenment Economics of the Individual, which shaped present Western Democratic Republics, are quite different from the Marxist Economics of Class Struggle, and the Totalitarianism which followed in the early 20th Century to present times. Publications on Economics as a Science are biased on philosophical bent and are, thus, advocacy papers, which prove success or failure based on respective individual or collectivist goals. As such, I believe we can only use historical results to make judgement.
Thanks.
Dear George, I am not a politician, I am a scientist, If politicians use scientific facts or they ignore them that is fine with me, but I will call it out....
Perhaps you can get some good food for thoughts in the following publications, first from other academics, and at the end, published by me.
Let's leave it here then.
Lucio
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The economic consequences of major tax cuts for the rich/2022
https://academic.oup.com/ser/article/20/2/539/6500315
“ In fact, our results are more in line with Piketty et al. (2014), who suggest that lower taxes on the rich encourage high earners to bargain more forcefully to increase their own compensation, at the direct expense of those lower down the income distribution.”
50 years of tax cuts for the rich failed to trickle down, economics study says/2020
https://www.cbsnews.com/news/tax-cuts-rich-50-years-no-trickle-down/
"Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will "trickle down" and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group — the rich.
The new paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes."
Trends in Income Inequality and its Impact on Economic Growth/2014
file:///C:/Users/Acer/Documents/TAXcuts/trends-in-income-inequality-and-its-impact-on-economic-growth-sem-wp163.pdf
"1. In most OECD countries, the gap between rich and poor is at its highest level since 30 years. Today, the richest 10 per cent of the population in the OECD area earn 9.5 times the income of the poorest 10 per cent; in the 1980s this ratio stood at 7:1 and has been rising continuously ever since. However, the rise in overall income inequality is not (only) about surging top income shares: often, incomes at the bottom grew much slower during the prosperous years and fell during downturns, putting relative (and in some countries, absolute) income poverty on the radar of policy concerns. This paper explores whether such developments may have an impact on economic performance."
Muñoz, Lucio, 2009, How Do Agricultural Development Benefits Actually Spread: Is it the Trickle Down Effect or the Embudo Effect?, In: Environment and Society, Special Edition, No. 372, January 8, ECOPORTAL, Buenos Aires, Argentina.
https://truesustainability.com/ART82.pdf
Sustainability thoughts 117: How the economic science based liberal democracy model should be expected to react when facing external shocks under equality?
https://truesustainability.com/ART160.pdf
Sustainability thoughts 116: How the economic science based liberal democracy model should be expected to react when facing external shocks under inequality? https://truesustainability.com/ART159.pdf
Muñoz, Lucio, 2021. Sustainability thoughts 115: How can the sciences based liberal democracy model and the liberal market model be linked under equality? What are the implications of this?, In: CEBEM-REDESMA Boletin, Año 15 Nº 1, January, La Paz, Bolivia.
https://truesustainability.com/ART158.pdf
Muñoz, Lucio, 2020. Sustainability thoughts 112: How can the hidden unequal nature of the liberal market model be detailed step by step? , Boletin CEBEM-REDESMA, Año 14, No.4, April, La Paz, Bolivia.
https://truesustainability.com/ART155.pdf
Muñoz, Lucio, 2020. Sustainability thoughts 114: How can the hidden unequal nature of the science based liberal democracy model and the hidden unequal nature of the liberal market model be linked? What are the implications of this?, In: International Journal of Business Management and Economic Review(IJBMER), Nov-Dec 2020, Volume 3, Issue 6, Pp. 54-62, ISSN 2581-4664, India.
https://truesustainability.com/ART157.pdf
Dear Lucio, I too am a scientist, and I understand your position. How does equality, beyond that of opportunity, work in any economy? What perpetuates an economy without innovation? Hopefully, your list of publications can provide some insight.
Good luck.
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