quinta-feira, agosto 20, 2015

Trickle-down

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No serious economist in modern era supports the trickle-down theory, nor is the IMF study about it at all. Rather, the trickle-down concept remains a straw man of liberal partisans used to attack any supply-side plan to cut taxes.
Certainly wealth can trickle down in the sense that lower taxes for a business could mean more revenue to expand their production and create jobs. However, wealth also trickles up through savings and investment. After all, the savings that lower- and middle-class people put into the bank are loaned out to businesses for profit. Similarly, their retirement savings are usually in the form of investments for big business.

This is fundamentally why supply-side economists support tax cuts for everyone: so both the rich and poor will have more money to spend, save, and invest in markets, fueling the private sector’s engine of prosperity. It’s not a trickle so much as a whirlwind.
As economist Thomas Sowell has repeatedly pointed out in his columns at Townhall, “no economist of the past two centuries had any such theory.” Sowell again:
Years ago, this column challenged anybody to quote any economist outside of an insane asylum who had ever advocated this “trickle-down” theory. Some readers said that somebody said that somebody else had advocated a “trickle-down” policy. But they could never name that somebody else and quote them.

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