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Trickle Down and Tax Cuts

ScandallB Wrote: Oct 04, 2012 10:50 AM
This is a very difficult concept to understand because most people think of economics as being a linear or static concept. i.e. if the government takes a smaller percentage in income tax, then it must necessarily get less in income tax. WRONG When the government allows the people to keep more of their money, they will spend it. When more stuff is purchased, businesses make more profit. When businesses make more profit, businesses need to hire more people to work for them. Guess what those new employees do? They pay income taxes. Think of it this way: 1. Assume that you tax 100 people at 25%. 2. What if you had 150 people to tax at 20%? Which income stream would be higher?
Dr. Thomas Sowell's "'Trickle Down Theory' and 'Tax Cuts for the Rich'" has just been published by the Hoover Institution. Having read this short paper, the conclusion you must reach is that the term "trickle down theory" is simply a tool of charlatans and political hustlers.

Sowell states that "no such theory has been found in even the most voluminous and learned histories of economic theories." That's from a scholar who has published extensively in the history of economic thought. Several years ago, Sowell, in his syndicated column, challenged anyone to name an economist from any economic school of...