The Econ 101 every Supplier Sider ignores, and why the Tickle Down isn't coming

[Wild Cobra]

George W. Bush ended the world. Okay, it's out there.

Yes, but even though he signed the SOFA, the dates he signed put it into Obama's administration time, and the liberals will give credit to Obama.

[scott]

So, your post is just some silly academic exercise of the type in which the Obama administration has been engaged to dig us out of our economic hole?

That you feel this is just some "silly academic exercise" is telling of the things you propose, which often times equate to "let's just throw some at the wall and hope it sticks".

Do you feel that basing policy on fundamental knowledge is "silly"?

And I'm not sure how any of this relates to Obama. They've not presented this information to my knowledge, nor have I cared to see what their opinion on the matter is. You may find this shocking, Yonivore, that some of us come up with our own individual thoughts rather than just ripping them from our favorite blogs or talking points.

How many of Obama's economic team actually has business experience?

This relates to this thread, how?

More relavent to this thread, what is your business experience?

A couple of things you forgot to mention in your scenario:

What percent of total income does Spacely Sprocket's $10 million EBIDTA represent? That will certainly affect which of the 4 (not 3 choices) he has.

Mr. Spacely could also, "4. Shelter the funds against taxation until it was advantageous to reintroduce them to the economy."

Say if, Mr. Spacely owned an offshore drilling rig or a coal mine or pipeline construction company, it might be in his best interest to park whatever surplus funds he has until there is a regulatory climate that does not threaten to put him out of business.

Actually there are countless other scenarios I didn't include. You see, in science, we build models by isolating specific variables to get a sense of their specific impact on the control group.

By starting with a huge model with countless variables, tweaking one of them, and then proclaiming a justified conclusion; you end up with same haphazard nonsense that you typically like to throw around.

In this case, you are suggesting that business owners are avoiding making capital investments and creating new jobs, which are perfect tax shelters (which is to say, those activities are completely non-taxable), by parking their funds in offshore accounts that aren't taxable, so that they can wait until income taxes are lower, which they will then invest in capital and create new jobs despite the fact that they are now LESS incentivized to do so...

You fail that one, but you have made a good case for closing these kinds of ta loopholes.

I understand you own a small business. Do you offer health insurance to your employees? If not, will you be exempt in 2013 or will you have to start providing coverage? If so, will your premiums increase?

If none of the above, you're fortunate. Many small business owners will be required to either reduce staff or accept a smaller EBIDTA margin because of the Patient Protection and Affordable Health Care Act. Many of them cannot afford it and will need to make drastic changes to their business model to accommodate the change.

Many have already said they will be laying off staff on January 1, 2013 because of it.

And Obamacare is just one example of how the uncertainty of regulation is affecting what companies currently do with their surpluses.

It's a huge factor you completely ignored. So did Larry Summers.

How is any of this relavent to the discussion on lower personal income taxes as they relate to capital investment and job creation?

And, I'm assuming you both took Econ 101. I didn't

It shows.

-- nor did many small business owners

Maybe they should have.

who are having to live through the reality of Obama's application of academic theory.

More irrelevant non-sense. I realize Play #1 out of the Idiot's Playbook to Political Debate is to fill the discussion with non-sequitous tangents to derail it from the actual topic, but a lot of us can see through it. Maybe you should go to Play #2, putting me on ignore, to save yourself future embarrassment.

[boutons_deux]

The Banksters GREAT Depression started under Repug admin, following conservative principles of (financial) deregulation, and ineffective/non enforcement (eg, Repugs blocked 19 states from stopping predatory mortage lenders, etc, etc).

Then Barry and Dems have been faced with automatic full court obstructionism from 20 Jan 2009.

[FuzzyLumpkins]

Would you agree that market uncertainty has a dampening affect on capital investment?

Actually, true supply-siders argue a lower tax rate combined with a regulatory climate that removes uncertainty and encourages business growth is the way to prosperity.

Nice how you slipped that genetically-mutated Laffer Curve into the post and turned into a linear regression equation.

The major instability in the market have been from terrorist bombings, banking deregulation, and our ty representatives bringing us to the brink of default.

The tax rate being all the o low has if anything correlated with said instability. When you correlate times with relatively high taxation such as 1940-1970 and again 1992-1998 we experienced the greatest economic prosperity this country has ever seen.

[scott]

Off to stimulate the Las Vegas economy. See ya' next week folks.

[Yonivore]

They've not presented this information to my knowledge, nor have I cared to see what their opinion on the matter is. You may find this shocking, Yonivore, that some of us come up with our own individual thoughts rather than just ripping them from our favorite blogs or talking points.

So, you decided to just start an economics thread in a political forum?

Cool.

[ElNono]

Lets look at the stock market as an example. Lets say the capital gains rate is completely done away with (as some democrats in congress have proposed). The investor will essentially pay 50% of his profit on a stock purchase/sale as tax. There is risk involved in buying stock. He may not make money or may even lose money. When an investor knows that a stock price has to rise 4% just to make a measly 2% profit, what is his incentive to risk money in the stock market?

The problem is that the stock market has largely shifted from "investors" to "traders". IIRC, almost a 1/3 of all trades are conducted strictly by machines right now, looking to load/unload stocks as fast as possible to make quick margins. This is probably a topic that deserves it's own thread, but overall, perhaps it's not such a bad idea to entice people to invest their money outside of the market to look for better margins.

[Yonivore]

Actually there are countless other scenarios I didn't include. You see, in science, we build models by isolating specific variables to get a sense of their specific impact on the control group.

I call bull on this deflection.

In the context of Trickle Down/Supply Side economics, the proponents of such a scheme suggest that if they had a lower income tax rate, then they would invest in business infrastructure and jobs. However, a lower income tax actually increases the opportunity cost of investing in business infrastructure and jobs.

You gave the Mr. Spacely and Spacely Sprockets scenario as a refutation of supply-side economic theory. I think leaving out something major, such as market uncertainty, as just being another of the "countless other scenarios" to which you could have referred is disingenuous.

Uncertainty caused by federal economic policy is a huge factor you didn't even broach.

But, you're right, I'm not an economist and this isn't an economic forum.

[Th'Pusher]

But, you're right, I'm not an economist and this isn't an economic forum.

We are all very well aware of the debate going on over the space that tax and economic policy overlap, and the argument over whether Tickle Down/Supply Side economics is the boost in the arm that our economy needs.

[CosmicCowboy]

Off to stimulate the Las Vegas economy. See ya' next week folks.

Have a great one Scott!

[ElNono]

Thanks scott, have a good trip.

[Clipper Nation]

Add the Environmental Protection Agency, Homeland Security, and Department of Education to that list and you've got a deal.

Those would fall under "useless pork" in my book, tbh...

[spursncowboys]

pack it up all the great minds like hyak, friedman and schumpeter. scott figured it out.

[spursncowboys]

.

[DUNCANownsKOBE]

Lets look at the stock market as an example. Lets say the capital gains rate is completely done away with (as some democrats in congress have proposed). The investor will essentially pay 50% of his profit on a stock purchase/sale as tax. There is risk involved in buying stock. He may not make money or may even lose money. When an investor knows that a stock price has to rise 4% just to make a measly 2% profit, what is his incentive to risk money in the stock market?

Right, because trading stocks leads to so much job creation.

[DUNCANownsKOBE]

The reason why, everything tried isn't working, is because of free trade. It's cheaper to outsource labor than build things here.

Get a handle on that, and we will see a growing economy again.

"Getting a handle" on the outsourcing of jobs would be going directly against trickle down logic.

The fact "job creators" can and do cheaply outsource labor without government regulation is proof "trickle down" doesn't work.

[spursncowboys]

"Getting a handle" on the outsourcing of jobs would be going directly against trickle down logic.

The fact "job creators" can and do cheaply outsource labor without government regulation is proof "trickle down" doesn't work.

What trickle down doctrine did you get that nugget from?

[spursncowboys]

I guess all trickle down robots care nothing about quality of product and only price.
DOK economist

[DUNCANownsKOBE]

I guess all trickle down robots care nothing about quality of product and only price.

Was it UTSA or the military that taught you to write like a chimpanzee?

Either way, I have no in idea what this post means.

[Trainwreck2100]

lol thinking rich people would just be some cool scros and trickle down some money to us bros

fify
lets not overuse scro

[Nbadan]

Once Upon a Trickle Down: The Rise and Fall of Supply Side Economics

[ElNono]

pack it up all the great minds like hyak, friedman and schumpeter. scott figured it out.

All of them packed it up a while ago...

But overall, scott isn't claiming any new discovery, he's merely illustrating under basic economic fundamentals why "trickle down" isn't creating jobs, or "trickling down", and how different tax rates have an impact on such decisions.

More importantly, why severely reduced or severely extreme tax rates on these "job producers" actually discourages job creation.

[Wild Cobra]

Off to stimulate the Las Vegas economy. See ya' next week folks.

I'm glad you aren't taking Obama's advice of avoiding that area.

Good for you.

Hope you stimulate it well, and are well stimulated in return.

[Wild Cobra]

The problem is that the stock market has largely shifted from "investors" to "traders". IIRC, almost a 1/3 of all trades are conducted strictly by machines right now, looking to load/unload stocks as fast as possible to make quick margins. This is probably a topic that deserves it's own thread, but overall, perhaps it's not such a bad idea to entice people to invest their money outside of the market to look for better margins.

Now I agree with your view on this one except the solution is not to penalize the investor. That's one reason why there are different capital gains rates. Now I would agree with taxing day traders at like 50%, but not holdings over say... maybe six months.

[Wild Cobra]

Would Mr. Spacely be a democrat or a republican?