Thread 17943776

My entire life people have held the position that Supply-Side Economics or "Trickle-Down Theory", is a lie to funnel wealth upward. But aren't tariffs a textbook example of the theory working in reality? Tariffs are an additional cost added by the government to the supply-side of the economy which causes firms to pass the extra cost onto the consumer, i.e. "trickle down". Which leads economists to say "Cutting tariffs (a tax on imports) will lead to lower prices for consumers and more spending". Doesn't this prove the theory right?

Furthermore, for those that want higher taxes for the rich, why do some taxes raise costs for consumers while others don't? What would be the genuine difference between a 25% import tax on an automobile, vs. a 25% sales tax on an automobile, vs. a 25% income tax on the firm selling the automobile? If taxes = higher prices, shouldn't keeping taxes low be better for the economy all around?

What am I missing here? If you're someone who wants higher taxes for the rich but is against tariffs, I'd love to hear where I've gone wrong in my thinking

how is it confusing to you that companies pass down the costs but not the profits?

>>17943814
Then why does it matter if we raise tariffs? If companies aren't going to pass down their profits from low import taxes, why shouldn't we force them to pay their fair share?

>>17943820
they're making their products more expensive for consumers, anon
they're never going to pay more than they can get away with

>>17943846
Then what is your position? If you believe cutting taxes for the rich will never result in their extra profits trickling down to consumers, why shouldn't we raise their taxes and reinvest that money into public welfare programs? And why does it matter how we do that?

If cutting taxes on GM won't make cars cheaper or raise the salaries of their workers, why does it matter whether we tax their imports or tax their income?

The most common answer to that is “kinda, but not the way you think”.

In pure budget math, you COULD raise enough money from American billionaires to lift everyone here above the poverty line. We’ve got about 900 or so billionaires. Their combined wealth is around $7 trillion. The annual dollars needed to bring every household right above the federal poverty line is roughly $168 billion a year. A recurring 2–3% levy on $7T would raise about $140–$210 billion a year, and a 5% levy about $350 billion a year. That easily covers the measured gap, with room for admin costs.

But those taxes alone wouldn’t solve the problem, the wealth would need to be.redirected efficiently. Measured poverty falls when cash or near-cash benefits rise. In 2021, the expanded Child Tax Credit helped push child poverty to a record low (5.2%), but when it expired, the Supplemental Poverty Measure rose to 12.9% in 2023.

Poverty is an annual flow and a one-off wealth grab funds at most a year. You’d need recurring revenue like a wealth/mark-to-market minimum tax to keep poverty down every year.

A federal wealth tax faces constitutional ambiguity such as apportionment rules and valuation/collection challenges. High effective rates invite avoidance like re-timing, borrowing against assets, and re-domiciling, which complicate revenue forecasts. You still probably raise a lot, but not the naïve static amount.

Cash matters most for income poverty, but durable reductions also need more housing supply and vouchers, health coverage, childcare, skills/work supports, and local cost-of-living fixes; otherwise transfers can be partially eaten by say landlords in supply-constrained metros.

A realistic package would be using a recurring tax on ultra-wealth/income to finance automatic, targeted transfers and supports like making the 2021-style refundable Child Tax Credit permanent, expand the EITC, fund housing vouchers + zoning/supply reforms, and streamline SNAP/TANF.

>>17943895
Quality post, just one thing -

take the Georgist pill

>>17943776 (OP)

The same people who say trickle down doesn't work will then say poor whites "benefited" from colonialism and slavery because the wealth of the slavemasters "trickled down". Weird how you lefties work.

>>17943776 (OP)
Tariffs are considered worse because they are a direct increase to the cost of goods that indiscriminately affect everyone while taxes can be targeted better and offer more flexibility. You can run a small company that hardly pays any taxes because when all your costs are paid for there's hardly any profit left, but you still pay your employees a good wage. In this scenario raising your taxes hardly matters because you have so little profit to begin with, but if 50% of your production costs are foreign imports then a tariff is absolutely going to fuck you up and possibly even bankrupt you, unless you shift that cost onto consumers, which in turn might slowly kill your business anyway.

The problem is that not all taxes "trickle down" the same way. The problem is elasticity.

Tldr version here:
>AI bubble is popping right now
>countries around the world are leaving the petrodollar
>economic growth since 1945 is fake, nothing but rents collected from conquered countries
The US is not making it to 250 years it seems. And it was so close, too! Looks like the arsenal built over 80 years both nuclear and conventional will be seeing use as the government defaults and collapses and successor regimes destroy one another in a wave of fallout worthy of ancient age Chinese style implosions.

>>17944046
Looks like I forgot one pointer there, with quadrillions in government debt going unpaid causing the US to break up.

>>17943853
>reinvest that money into public welfare programs
Because some are more prone to live in public welfare and coincidentally they make other functioning people's lives more miserable

>>17943776 (OP)
>What am I missing here? I
Ability of passing down tariffs (and other goods taxes) depends on relative elastity of supply and demand.
Google it

>>17943895
>A federal wealth tax faces constitutional ambiguity such as apportionment rules and valuation/collection challenges.
Only tax you need is 100% tax on money counterfeiting also known as fractional reserve banking.

>>17943776 (OP)
Tariffs are generally held as an inefficient policy and because economics is bland, leftists tend not to get heated over it. In some cases leftists want to place tariffs on cheap western products flooding undeveloped countries and putting traditional arts and crafts out of business and they view western tariffs as unfair and manipulative or the result of xenophobia.

There are certain situations where tariffs are justified, for example to promote domestic industry useful in wartime or as a response to protectionism, monopolies or immoral activities in other countries. Everywhere else the usual laws of supply and demand apply, it is a tax, taxed enough to get people to shift to domestic manufacturing, but this does not necessarily boost manufacturing and jobs. A tariff on steel for example will make products made from steel less profitable and may reduce jobs in that area and slow high tech manufacturing.

>>17943776 (OP)
>But aren't tariffs a textbook example of the theory working in reality?
No.

Trickle-down economy fails because the percentage of their income the rich spend on everything shrink further the richer they get.
For example, if Elon would still be spending a quarter of his income on the same type of food items he ate back in his college days, then his spending would actually drive a vast part of the economy, from farmers, to cooks to plumbers. We'd be then using his money to renovate the infrastructure, just so that it could accommodate the enormous, multi-million dumps he takes three times a day. Instead, he spends it on Twitter and on pimping out virtual clone of his exes.

Which is why taxing the rich is good - they literally can't spend the money anyway and tend to start blowing it on dumb, sus and criminal stuff eventually.

>>17943776 (OP)
leftists are retarded. trickle down economics are why america isn't a poor shithole like yurop. you can basically make near double your salary in America than you can in yurop.

>but muh free healthcare
enjoy dying while you wait for treatment too

>>17943957
I see, so blanket tariffs on things like raw materials have widespread consequences that can end up hurting domestic industry more than helping it. Could you give an example of a targeted tax that doesn't raise prices across the board?

>>17944321
>Could you give an example of a targeted tax that doesn't raise prices across the board?
A progressive income tax specifically targets high earners without raising prices across the board.

>>17943776 (OP)
>My entire life people have held the position that Supply-Side Economics or "Trickle-Down Theory", is a lie to funnel wealth upward.
People = Retarded socialists
>why do some taxes raise costs for consumers while others don't?
Nonsense, all taxes raise costs for consumers, if they didn't they wouldn't be called taxes.
>If taxes = higher prices, shouldn't keeping taxes low be better for the economy all around?
Anon is starting to figure it out, clevergirl.png etc

>>17944333
>in the system where food is produced to make a profit there is such a tremendous surplus of food that people eat themselves to morbid levels of obesity, sometimes even death
>in the system where food was supposed to be produced for the muh collective people starved to death by the millions
crazy how that works

>>17944334
>A progressive income tax specifically targets high earners without raising prices across the board.
Complete and utter nonsense
In 2008 the top 1% of US income earners paid 38% of federal income tax revenue
The bottom 50% of US income earners paid 2.7% of income tax revenue
I love how socialist retards like Elizabeth Warren and Bernie Sanders and their ilk think government is magic
"We're not raising taxes on you!!1 We're raising taxes on Bill Gates and Jeff Bezos!!1"
Yeah, who the fuck do you think employs people?
I love how socialists think that you can just magically raise taxes forever with no consequences
When taxes are raised on the wealthy they do three things
1. Raise prices on goods they are selling, these are business owners, that's what they do
2. Reduce costs by automation, firing workers, reducing benefits, lowering salaries etc
3. Tax evasion, hiding money from the US government overseas is so easy a child could do it
Leftism is the kiddie pool of public policy
You people are idiots

>>17944334
Is that because rather than placing extra costs explicitly on production, you're targeting a specific individual's profit? Like for example, taxing the CEO of Ford at 25% his income doesn't necessarily make it 25% more expensive to produce an automobile?

I apologize for the stupid questions, I really want to learn and I appreciate your response

>>17944371
The difference is that you're paying taxes on PROFITS, not increasing the cost of your inputs. This is the balance sheet of anon's company:
Expenses:
>$50 import of raw materials
>$40 wages for employees turning materials into widgets
Revenue:
>$100 from sale of widgets
The net result is a $10 profit. Let's say your tax rate is 10%, so you are taxed $1, leaving you $9 left. If your tax rate was doubled then you would pay $2, leaving your with $8 left. If your country get engaged in a trade war and 50% tariffs were placed on the stuff you need to import your import costs now rise to $75, and you're suddenly operating at a $15 loss, unless you raise your prices. Hopefully this makes sense to you, a lot of companies operate on pretty thin margins, some even operate at losses and some barely make any profit even though their revenue is massive, meaning they don't pay a lot of tax (and thus aren't hurt as much by tax hikes) but tariffs can MASSIVELY increase their production cost.
>Like for example, taxing the CEO of Ford at 25% his income doesn't necessarily make it 25% more expensive to produce an automobile?
It doesn't make it any more expensive to PRODUCE to automobile. The CEO might decide to raise prices though, in order to increase profits, but he doesn't have to.

>>17944368
So you are in favor of a flat tax rate? A person making $15,000 a year should pay the same percentage as a brain surgeon making $800,000 a year, because the country starts falling a part the minute you tell him that after $500,000 the government is raising his tax rate from 20% to 25%?

>>17944401
>So you are in favor of a flat tax rate?
Yes
>A person making $15,000 a year should pay the same percentage as a brain surgeon making $800,000 a year
Yes
>because the country starts falling a part the minute you tell him that after $500,000 the government is raising his tax rate from 20% to 25%?
Correct
>a part

>>17944391
It does make a lot of sense, thank you. The difference is taxing earnings vs. taxing raw materials required for production. One may result in raising prices, the other necessitates raising prices to meet production costs.

Trump was vocal in the 80s about wanting tariffs on Japanese consumer goods to protect American production. Is such a thing feasible today? I know it would lead to things like televisions being more expensive because of less supply, but in general have we deindustrialized so much that protectionism is obsolete?