Trickledown economics" and "trickledown theory," in United States political rhetoric, are characterizations by opponents (principally Democrats) of the policy of lowering taxes on high incomes and business activity. Proponents of these policies claim that they will promote new investment and economic growth, thereby indirectly benefitting people who do not directly pay the taxes. Opponents characterize this as a claim that the people who would otherwise pay the tax will distribute their benefit to less wealthy individuals, so that a fraction will reach the general population and stimulate the economy.[1] Proponents of the policies michael kors outlet online store generally do not use the terms "trickledown economics" themselves.
Today "trickledown economics" is most closely identified with the economic policies of the Ronald Reagan administration, known as Reaganomics or supplyside economics. A major feature of these policies was the reduction of tax rates on capital gains, corporate income, and higher individual incomes, along with the reduction or elimination of various excise taxes. Initially a product may be so expensive that only wealthy people can afford it. Over time, however, the price will fall until it is available michael kors factory outlet to the general publicTrickle down theory of economics is the theory that supporting businesses and industries will in turn have a positive impact on the individual. Using trickle down theory the government may give incentives to businesses, rather than indivdiuals, in hopes that supporting businesses will allow the economy to flourish. When businesses succeed they will hire more workers and put more money into the economy, which will allow individuals to have a better economic situation (ex. lower unemployment, better living for lowest income individuals).
Paris Hilton spends thousands of dollars to buy a designer purse, and people get upset that she wasting so much money. They shake their heads and mutter, "Just think of how many families could be fed with that money, but she wastes it on a purse instead! How selfish!"
People who believe in trickledown economics might still shake their collective heads at Paris Hilton, but are not concerned with her designer purse purchase. They believe that the thousands of dollars she spent did not simply disappear from the face of the earth. Instead, they believe that the money will down to ordinary blokes like us. The designer purse company, for example, is owned by people (or by stockholders, who are of course also people). These people take the profits from her purchase and pay wages to their employees, pay electric bills, pay advertisers, pay caterers, pay income taxes, pay for their children daycare, pay for their drycleaning, pay for newspapers and toothpaste, etc. In other words, rich people don sit on their money and make it unavailable to everyone else. Their money, once spent, no matter how lavishly, eventually trickles down into everyone pockets. According to the trickledown theory, we might have reason to be jealous that Paris can afford her designer purse, but we don have reason to be angry.
"Trickledown economics" and "trickledown theory," in United States political rhetoric, are characterizations by opponents (principally Democrats) of the policy of lowering taxes on high incomes and business activity. Proponents of these policies claim that they will promote new investment and economic growth, thereby indirectly benefitting people who do not directly pay the taxes. Opponents characterize this as a claim that the people who would otherwise pay the tax will distribute their benefit to less wealthy individuals, so that a fraction will reach the general population and stimulate the economy. Proponents of the policies generally do not use the terms "trickledown economics" themselves.