When Romney was running for president he was for cutting taxes in order to encourage the "job creators." Paul Ryan and other members of Congress have had a similar trickle-down theory, claiming that cutting corporate income taxes and capital gains taxes will encourage investors to offer more capital to businesses, helping businesses expand, thereby helping businesses created more jobs.
In her column today in the Washington Post, Catherine Rampell describes her opposition to these "trickle down" rationales. She writes that "By nearly every available metric, firms are not exactly starved for capital" and that corporations are already "sitting on Mountains of cash. Putting money into stocks has boosted the price of stocks to an all time high — high compared to corporate earnings. She writes that allowing corporations to transfer their profits back to the United States or offering them an ultra-low tax rate would, as before, result in the money going "mainly into stock buybacks.
President Trump argues that reducing the tax rate on American businesses would help keep jobs in "the America we love," that US taxes are driving companies to invest and hire abroad. Rampell sees this as a phony claim. Companies are investing abroad for other reasons and profits made abroad are taxed when the money is returned to shareholders. Trump she says knows this and has "complained about worldwide taxation in his speech."
So now with Trump we have more "trickle down" theory that will fail.
One who comments on Rampell's article claims that wealth does not trickle down; it flows upward to the top 1 percent. Another points out that our economy is already pretty much at full employment. A third describes President Trump as incapable of a coherent presentation on ANY topic. Another writes that taxes are supposed to correct a "systemic" imbalance, and someone else points to the top marginal tax rate under President Eisenhower having been at 90 percent.
Copyright © 2018 by Frank E. Smitha. All rights reserved.