Consider this our second lesson in economics; Economics 102.
Lets talk about high corporate (or business) taxes versus low taxes. I argued with a die-hard Conservative for about an hour this weekend, and he refused to see the sense of what I am about to tell you. Let’s see if it makes sense to you, or if I am wet behind the ears. I’ll use the same examples I gave him.
Let’s say I have two tax scenarios; one is with corporate/business taxes at 25% and one is at 75%. Please keep in mind that no one is suggesting even close to a 75% tax rate, but let’s use it for an example.
My Conservative friend said that trickle down economics works because if he had lower corporate taxes (he doesn’t own a business) he would use that extra money saved with the lower taxes to buy equipment, which would trickle down to the factory that made the equipment and the people employed there. Well enough.
Except that’s not the way it works in business. It sounds good, it almost sounds right, but it isn’t. It’s an anecdote that has no basis in reality. I answered that any business person waiting until after he had paid his taxes to see what he had left for capital equipment purchases is a moron and deserves to get gouged by taxation. That wasn’t met with a great deal of understanding or approval, so I explained why I said it.