Trickle Down: Does it work?

[Beowulf]

All tax-break schemes are based on rules whose impact will vary from industry to industry. It's not just a matter of company size. And you're not addressing the point made earlier, that this distribution is done without regard for the company's individual merits, whereas the public would distribute its cash differently.

The public already spends it's cash as it sees fit. Giving them a marginally larger amount of cash won't change it's spending habits.

That would be a powerful rebuttal ... IF the objective were to make the public change its spending habits. Unfortunately for you, it's not.

If they don't change their spending habits, it doesn't make a difference who you give the money to.

The tax breaks don't really have to have a regard for the company's merits, because the consumer has already decided whether or not it's worthy. If the company makes no money, then they won't get a tax break.

You obviously haven't known enough creative accountants.

Obviously not.

[Darth Wong]

That would be a powerful rebuttal ... IF the objective were to make the public change its spending habits. Unfortunately for you, it's not.

If they don't change their spending habits, it doesn't make a difference who you give the money to.

What the hell are you talking about? Their current spending habits are more than adequate to boost the economy if they have more money. The current trend in corporate spending, on the other hand, is excellent for boosting the economies of India and China, not the US.

You obviously haven't known enough creative accountants.

Obviously not.

They're clever bastards. They really are; I remember one of my former employers working some paperwork to get back $400k from the government for R&D expenses relating to research that was mostly performed by some other company, but with whom we had partnered in a small way.

[tharkûn]

Talk about fearmongering...

So ensuring the money flows up through the various levels, paying wages and increasing profits for a multitude of companies, is all inferior to giving it to the richest 10%, the primary group responsible for money disappearing into savings and not being invested in some form or another?

Money doesn't disappear into savings, you drop your money into savings, the banks then loan the money out or invest it themselves. If you are a velocity theorist then you could bitch and moan about how the velocity is slowed by such a move; however money can only be removed from the system by burying it.

Bankers don't make money buy sitting on it, particulary since virtually all western nations run positive inflation at all times, they have to send it back into the economy or they can't turn a profit.

Increasing production capacity does not necessarily increase local economic activity, since people have to BUY the increased volume of merchandise in order to make that happen.

The stock answer is not that the goal is to increase volume, but to decrease per unit costs. For instance if the extra investment coming from the rich, banks, or the tax breaks themselves can pay the high up front costs for modernizing a plant. What was previously a marginally economical investment becomes good business as the per unit cost nose dives.

Again the problem here is that assumption that marginally economic expansion is always possible doesn't necessarily hold true. Even if it does there is nothing that says it must be within your borders. Division by 10 again.

[Tom_Aurum]

I thought we solved this one back in the eighties. IT DOES NOT WORK. Individuals with money usually want to do one thing. Make more money. Not actually care about the people they make the money off of. Not to pick on anyone, but this is one of the few points where marx makes sense.