How The Trickle Down Theory Works

How The Trickle Down Theory Works
How The Trickle Down Theory Works
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2 thoughts on “How The Trickle Down Theory Works

  1. There is one situation where cutting taxes for the rich helps everyone. If the top tax rate is so high that the rich don’t have enough investment capital to fund businesses, this can cause problems. The case could be made that Reagan faced such a problem – the top rate was 70% and stock/bond prices were historically low. But if you continue those policies too long, you wind up with high income inequality and a stubbornly weak economy. That is the current situation, and was also true in the 1930’s.

    • Very true Michael. Good point. When there is no money stimulating the economy and tax rates are stifling, then lowering the tax rate came help. As with all policies, there are conditions and environments in which they will work, and there are conditions and environments in which they will not.

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