this post was submitted on 15 Apr 2025
779 points (99.4% liked)
/r/50501 Mirror
860 readers
1097 users here now
Mirrored /r/50501 Popular Posts
founded 1 month ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
What you are describing is trickle down economics. Word for word. The rich spend more, so the people below them earn more. Its not new, and its the whole reason we are in this goddamned mess to begin with. We stripped regulations and let the rich run roughshod all over the economy with the hopes that their money will trickle down to the rest of us. So...
I guess I know which one...
You have inaccurately described trickle down economics.
Trickle down economics is the idea that reducing income taxes makes more money available for employers to pay workers. Trickle down economics is the idea that richer employers pay more workers higher salaries than regular employers, so we should establish a tax policy that enriches employers.
They sine qua non of trickle down economics is "lower tax rates". If you are not talking about reducing taxes, you are not talking about trickle down economics.
Trickle down economics are bullshit, because taxes are paid on the money that is leftover after paying workers; after business spending. When an employer stops spending and tries to take money out of the business, the tax man takes his bite.
Avoiding the tax man is easy: pay out all your revenue to workers, contractors, venders. Pay out all of your revenue, and you owe nothing.
A punitively high marginal tax rate allows employers to take a reasonable amount of business profits at an acceptable tax rate, then threatens to confiscate pretty much everything after. Nobody pays 91% on any part of their income; everyone gets rid of their excess revenue by buying stuff from workers, contractors, vendors, so that there is no unreasonable excess left for the tax man to take.
Tax avoidance in the hopes of spending more money isn't any different than a lower tax rate. You are just putting a different face on trickle down, not changing the mechanism. Regulation and oversight are the first steps, and we don't have those, so no matter what we do, it won't change anything.
Big difference. Not all spending is the same.
With low tax rates, investment is incentivized: spending on securities, financial instruments. With high tax rates, trade is incentivized: spending on goods and services.
The mechanism you're describing still relies on wealthy decision-makers choosing how to allocate resources, with benefits supposedly trickling down, just with different incentives driving those decisions.
Without proper regulation and oversight, even with high tax rates, businesses can characterize financial instruments as "business expenses", create shell companies and circular arrangements, or move money offshore. Nothing changes.
We're having two different conversations, apparently. You're talking about enforcement. I'm talking about policy.
The low-tax policy we have is fundamentally designed to funnel money into the hands of the wealthy. It doesn't matter how much we enforce that policy: the policy itself is exacerbating wealth disparity, income disparity, wage stagnation, etc. "Regulation" and "oversight" of compliance with that harmful policy does not make it less harmful.
Policy enforcement is meaningless when the existing policy is the problem. We need a tax policy that drives wealth toward the working class.
Regulation and oversight only become important after we have a valid policy to be regulated and enforced.
We're having the same conversation. I'm just saying that the IRS has been gutted to a shell and had to be rebuilt before we even begin to worry about how much anyone is getting taxed. Regulation first. Then we can look at the rates.
The closest we've come to having the same conversation was when I claimed that the current tax policy is the root cause of wealth disparity, income disparity and wage stagnation. From my point of view, your response was "Enforce it anyway".
Our current tax policy was established by Reagan. It was not designed to incentivize a thriving economy. It was deliberately designed to funnel money to the rich.
It does not matter how much we regulate or enforce Reagan's tax policy, because even 100% perfect compliance with Reagan's tax policy promotes wealth disparity, income disparity, wage stagnation, and all the other socioeconomic problems that these conditions create.
Until we have a proper, economy-focused tax policy to enforce, enforcement is irrelevant.
I didn't say, "enforce it anyway." I said that we have to be able to enforce anything we go. Go ahead. Change the tax rates. Tell you what, I'll do it for you. Corporate tax is 91% now. Boom. Done.
What's that? I have no power to enforce it? Kinda like the IRS and our currently gutted system? Well, it doesn't matter, because we changed it and now everyone will just do it.
The IRS can audit books and initiate enforcement action at least 7 years after the fact. So yes, even if the IRS is currently gutted, "everyone" tends to at least pay lip service to the rules, because they don't know if the IRS will stay gutted through 2032.
Our current tax policy is not beneficial to the economy. Enforcement of the last seven years of Reagan's garbage policy doesn't get us anything. So there is no urgent need to rebuild the IRS, and won't be until we establish good tax policy.
Establishing new policy has to be the priority. We have seven years to rebuild the IRS to enforce the policy we establish today.
Im out.