Economics: Trickle-down theory doesn't work

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I posted a while ago a thread about Unionism and how it is holding Australia back, it is backed by evidence that labour movements destroy industries and cause disturbances in the laws of supply and demand which in turn results in an economic system that chugs along like a misfiring engine.

People assumed I was pro-right because I was hating on the little guy, it is not. I do not have an affiliation with either left or right, I do believe that you can only judge a society based on the conditions of the least fortunate citizens of that nation, if you can only rise up at the cost of other people then people are no better than those that used to enslave people.

To balance that post I now present another topic for digestion, please feel free to throw the rhetoric of whatever point of you that you are doggedly sworn to defend, or discuss the topic.

For those who are unsure what the trickle-down theory is, it is the economic assumption in a Laissez Faire economic system (a system where there is little in the way of government intervention and is largely self-regulated) where you do not stand in the way of the rich making money (taxing, regulating, etc) and as they make more wealth they will employ more middle and lower class people and the wealth trickles down.

This concept has been the catalyst for right wing people pushing for tax cuts, tax incentives, schemes and havens for the rich and super rich and laughing propaganda campaigns like bloated miners who derailed any realistic or functional resource tax on miners who lease the rights to strip the country of it's natural resources and get around paying any level of tax justifiable by their accumulation of wealth.

This theory is a sham. The free market has ALWAYS operated on the principal that were is demand there will be supply. The evidence around the world just does not exist, wherever they have lowered the effective tax on the rich it has resulted in the rich getting richer, even when there is significant productivity gain the effective gain on middle class and working class after inflation shows no basis for any kind of re-distribution of wealth or creating more opportunities.

Is it a flaw in the economic theory? There is nothing wrong with the theory, there is something wrong with people, we live in a period of significant wealth but all you hear about is downsizing, outsourcing, diversification. These are concepts built around rich people trying to get richer by exploiting the system rather than putting the wealth they have created into the economy to create more jobs, more wealth and share that wealth.

These people are money addicts, they are sick, there is something wrong with these people, they are rotten to the core and if given the power they would enslave the world. Lust for power breeds a type of human being fit for a prison cell, not leading a nation or the world. There is something wrong with the values we instill in people. How much is enough? Seriously how much money would make people happy?

Is the answer raising tax rates on the rich? No. There is empirical evidence around the world that lower high end tax rates generates more taxation revenue. Does this mean lower tax rates is good for the economy? No, it means these the higher the tax rate is the more people put money into tax shelters, tax havens and abuse taxation loopholes which allows people better off to dodge taxation in one form of another.

We need to shut down any form of tax avoidance and tax minimisation. Family trusts, negative gearing, hobby farms, the list goes on of numerous havens and shelters for people to reduce the amount of tax they pay. Negative gearing is directly blamed for our over-cooked housing market, and has created a glut of negatively geared stock market investors who are on dodgy margins who sell at the first sign of a bump in the market which can cause dire problems for listed companies.

The stock market isn't a casino and listed companies are not roulette wheels, it needs wise investment so we only fund worthwhile companies.

Should we turn to business leaders for solutions? These are the same leaders of of our top 100 companies in the ASX of which 61 of the 100 maintain 686 subsidiaries in 'secrecy jurisdictions' according to recent report. The list of companies is a who's who of our largest institutions. What are these secrecy jurisdictions? These are off-shore tax havens, stable places of Aussie business like the British Virgin Islands, the Cayman Islands, Mauritius, Marshall Islands, Belize, Bermuda and other pillars of Australian trade.

We are being denied billions of dollars annually by our corporations in corporate taxation. USA more than $1.5 trillion dollars annually.

The scope of abuse that is tolerated in this country and around the world is abhorred. Our economic system is floundering due to a corruption in morals and values and the major political parties know full well what is going on and have turned a blind eye to it for far too long and it is getting out of control.

We need to implement severe legislation which treats massive defrauding of the government and the nation on a massive scale tantamount to treason with life imprisonment and the stripping of personal assets of people convicted with the ability to trace the source of origin of all ill-gotten gains and made any contracts void which disperses wealth to other parties.

More importantly, we need to overhaul the morals of our society. It is possible to build into our taxation system a model where it provides some form of legitimate tax deductions for real investment in Australian businesses which creates jobs in Australia and puts more money in the hands of the lower and middle classes who with more money will have demand on goods and services which will drive economic growth and provide job opportunities.

We need to get our rich around the profit at any price mindset, what are you going to do with billions of dollars? You have a great opportunity to create more business, create more wealth for lower classes and profit from. Be happy with a reasonable return on investment and do not strip jobs and send them off to foreign countries just because you are disgusting greedy person.

There was a time when the wealthy were the leaders of nations and made sacrifices to make nations better, now they are the wart on the arse of society.

The difference between being an exploitative disgustingly rich person and swinging from a noose is a revolution where the people they have walked all over have had enough and revolt. It is in the best interest of the rich to have a fair and just system because if we resort to law of nature they will be nowhere near the top of the food chain.

Moderation is the key to life.
 

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[quote="Tas, post: 30654112, member: 5965"These people are money addicts, they are sick, there is something wrong with these people, they are rotten to the core and if given the power they would enslave the world. [/quote]




But that is the nature of humans. The greed for wealth has always been around. Be it the most cows or the most billions. It's Darwinism at it's finest.

People should just accept that the human race is designed to produce the 'rich' and the powerful and relax more.
 
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These people are money addicts, they are sick, there is something wrong with these people, they are rotten to the core and if given the power they would enslave the world. Lust for power breeds a type of human being fit for a prison cell, not leading a nation or the world.

I particularly enjoyed this part.

A little too much thunderbird in the park?
 

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I posted a while ago a thread about Unionism and how it is holding Australia back, it is backed by evidence that labour movements destroy industries and cause disturbances in the laws of supply and demand which in turn results in an economic system that chugs along like a misfiring engine.

People assumed I was pro-right because I was hating on the little guy, it is not. I do not have an affiliation with either left or right, I do believe that you can only judge a society based on the conditions of the least fortunate citizens of that nation, if you can only rise up at the cost of other people then people are no better than those that used to enslave people.

To balance that post I now present another topic for digestion, please feel free to throw the rhetoric of whatever point of you that you are doggedly sworn to defend, or discuss the topic.

For those who are unsure what the trickle-down theory is, it is the economic assumption in a Laissez Faire economic system (a system where there is little in the way of government intervention and is largely self-regulated) where you do not stand in the way of the rich making money (taxing, regulating, etc) and as they make more wealth they will employ more middle and lower class people and the wealth trickles down.

This concept has been the catalyst for right wing people pushing for tax cuts, tax incentives, schemes and havens for the rich and super rich and laughing propaganda campaigns like bloated miners who derailed any realistic or functional resource tax on miners who lease the rights to strip the country of it's natural resources and get around paying any level of tax justifiable by their accumulation of wealth.

This theory is a sham. The free market has ALWAYS operated on the principal that were is demand there will be supply. The evidence around the world just does not exist, wherever they have lowered the effective tax on the rich it has resulted in the rich getting richer, even when there is significant productivity gain the effective gain on middle class and working class after inflation shows no basis for any kind of re-distribution of wealth or creating more opportunities.

Is it a flaw in the economic theory? There is nothing wrong with the theory, there is something wrong with people, we live in a period of significant wealth but all you hear about is downsizing, outsourcing, diversification. These are concepts built around rich people trying to get richer by exploiting the system rather than putting the wealth they have created into the economy to create more jobs, more wealth and share that wealth.

These people are money addicts, they are sick, there is something wrong with these people, they are rotten to the core and if given the power they would enslave the world. Lust for power breeds a type of human being fit for a prison cell, not leading a nation or the world. There is something wrong with the values we instill in people. How much is enough? Seriously how much money would make people happy?

Is the answer raising tax rates on the rich? No. There is empirical evidence around the world that lower high end tax rates generates more taxation revenue. Does this mean lower tax rates is good for the economy? No, it means these the higher the tax rate is the more people put money into tax shelters, tax havens and abuse taxation loopholes which allows people better off to dodge taxation in one form of another.

We need to shut down any form of tax avoidance and tax minimisation. Family trusts, negative gearing, hobby farms, the list goes on of numerous havens and shelters for people to reduce the amount of tax they pay. Negative gearing is directly blamed for our over-cooked housing market, and has created a glut of negatively geared stock market investors who are on dodgy margins who sell at the first sign of a bump in the market which can cause dire problems for listed companies.

The stock market isn't a casino and listed companies are not roulette wheels, it needs wise investment so we only fund worthwhile companies.

Should we turn to business leaders for solutions? These are the same leaders of of our top 100 companies in the ASX of which 61 of the 100 maintain 686 subsidiaries in 'secrecy jurisdictions' according to recent report. The list of companies is a who's who of our largest institutions. What are these secrecy jurisdictions? These are off-shore tax havens, stable places of Aussie business like the British Virgin Islands, the Cayman Islands, Mauritius, Marshall Islands, Belize, Bermuda and other pillars of Australian trade.

We are being denied billions of dollars annually by our corporations in corporate taxation. USA more than $1.5 trillion dollars annually.

The scope of abuse that is tolerated in this country and around the world is abhorred. Our economic system is floundering due to a corruption in morals and values and the major political parties know full well what is going on and have turned a blind eye to it for far too long and it is getting out of control.

We need to implement severe legislation which treats massive defrauding of the government and the nation on a massive scale tantamount to treason with life imprisonment and the stripping of personal assets of people convicted with the ability to trace the source of origin of all ill-gotten gains and made any contracts void which disperses wealth to other parties.

More importantly, we need to overhaul the morals of our society. It is possible to build into our taxation system a model where it provides some form of legitimate tax deductions for real investment in Australian businesses which creates jobs in Australia and puts more money in the hands of the lower and middle classes who with more money will have demand on goods and services which will drive economic growth and provide job opportunities.

We need to get our rich around the profit at any price mindset, what are you going to do with billions of dollars? You have a great opportunity to create more business, create more wealth for lower classes and profit from. Be happy with a reasonable return on investment and do not strip jobs and send them off to foreign countries just because you are disgusting greedy person.

There was a time when the wealthy were the leaders of nations and made sacrifices to make nations better, now they are the wart on the arse of society.

The difference between being an exploitative disgustingly rich person and swinging from a noose is a revolution where the people they have walked all over have had enough and revolt. It is in the best interest of the rich to have a fair and just system because if we resort to law of nature they will be nowhere near the top of the food chain.

Moderation is the key to life.
I am not a supporter of the rich but your arguments aren't the best here. Trickle down economics has plenty of evidense of working. Japan, Korea and now China are fantastic examples of how removing taxes, regulations and red tape and allowing capital to flow to equalise marginal productivity across societies results in higher wage growth in the poorer societies. Japan was a basket case in the 50's and was a world leader by the 80's. Likewise the wages in Korea skyrocketd in the 70's and 80's. China's wages growht has skyrocketed over the past 20 years and doesn't look like slowing down.

Wages of the lower class in developed economies aren't a good example to use because whilst their economies have been lowering taxes, there is this thing called globalisation which has been happening and this has resulted in investment flowing to developing economies and therefore wages of low skilled workers in developed economies have stagnated. This is trickle down economies in action, but at a global level. The capital has gone from the rich countries to the poor countries and made the workers in the poorer countries much much richer and the workers in the richer countries only slighty poorer, if poorer at all. It works. It creates a more equal world.

Does this mean that the rich should have lower taxes. Not necessarily. On capital they create and the wages that they earn I would say yes. Definately. On the capital that they inherit through no effort of their own, I say tax them through the roof.
 
But that is the nature of humans. The greed for wealth has always been around. Be it the most cows or the most billions. It's Darwinism at it's finest.

People should just accept that the human race is designed to produce the 'rich' and the powerful and relax more.

Society puts restrictions on how much we tolerate of human nature. There are instinctive elements to the desire for wealth and power, that is fine if you do not break the rules of society.

We have introduced a system of taxation which is a redistribution of wealth but have created numerous loopholes for people to circumvent this process. Our ATO will chase some average Joe through the courts to chase down some minor tax debt and audits numerous low income earners because their nickle and dime deductions looks too high but we turn a blind eye to massive abuse of the system.

If everyone doesn't play with the same set of rules then why should bikkie gangs have to obey rules which disadvantages them? What happens when the order of our society is just ignored? Those with wealth and power need only look at what happens when anarchy takes over, like the riots in England or the riots in the USA when order was lost. If the peons are not happy with their lot and they feel they are abused and taken advantage of by those with power and wealth the result can be bloody and brutal.

If we do not restore order in our country and correct or failing moral compass it is only a matter of time until a socialist movement takes over the country. Our government has been in power a nanosecond and it is already got the stain of corruption and abuse of power, while riding the campaign of honesty and trust.

If people lose faith in our ability to manage our affairs and they are unhappy with their lot in life then if the movement gains momentum it can catch like wildfire.
 
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If people spend money then that is the trickle down effect in action. The only problem is you can't dictate where people will spend their money and the manner individuals spend isn't necessarily always in the best interests of society. Magnify that 1000X if you are dealing with billion and millionaires.

Now while we live (still) in a liberal democracy which states equity and equal opportunity for all there must be mechanisms in place in certain areas considered key to human dignity. Shelter, medical care, education, roads and transport (society wide) etc etc. For a government to claim trickle down is all that is needed has got to be the most slovenly, lazy and borderline corrupt approach I've evr heard of. So on one hand we have no need for tax to be paid at all as the rich will pick up the tab for all the goods that are met USA style? Please. (That is one thing Ron Paul got horribly wrong stating things like universal health care and welfare groups need not be funded as private charity would step in).

Tax revenue has to cater for the public good. Things like an army, roads are a given and if it is deemed a social benefit then an educated and medically cared for population as well. Thus if you as the public benefit it is only fair that a fair proportion of tax is paid. (Even billionares need an educated, literate workforce for the meatier projects where is that going to come from?)

Now trickle down does have a place but how effective is it? Take WA's mining boom. Sure those in its direct orbit who are either employed or provide services to miners benefit but the real wealth isn't spread. Thus you may end up with a disadvantage as those not benefiting wear higher inflation costs. As for the billions generated most of that is spent/goes overseas anyway.

Most people spend a very low proportion of income on charity/social causes they spend on self interest. Nothing wrong at all but if self interest becomes tax and economic policy this country will become a basket case. People can and should spend on what they want. But to live as part of the benefit of civil society paying a fair rate is only fair.
 
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Does this mean that the rich should have lower taxes. Not necessarily. On capital they create and the wages that they earn I would say yes. Definately. On the capital that they inherit through no effort of their own, I say tax them through the roof.

Capital created definitely deserves a tax break as without it there is no pie for anyone to split so to speak. By wages on top I suppose you mean future profits down the track, to a point yes but where do you draw the line? A tax scheme structured for new capital could be structured in terms of capital and business start ups like an angel or venture start up where you pay no tax and/or are staked but the investor (in this case government) gets a massive return on their investment if the project strikes pay dirt.
 

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OP is a very bad fail. On a Krugmanesque level

There are numerous examples of tax cuts actually seeing the rich pay a higher % of taxes. See tax cuts under Thatcher, CGT cut under Reagan etc. The real world evidence is rather overwhelming ie where tax rates are high cutting them will actually see the rich pay more because they have far less incentive to evade.

Recent example was the move in the UK to increase the top rate from 40p to 50p. Didn't go so well.

More importantly, we need to overhaul the morals of our society.

#reeducationcampsFTW

One wonders why there is such a strong correlation between countries with lower taxes and higher charitable giving
 

blackcat

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I am not a supporter of the rich but your arguments aren't the best here. Trickle down economics has plenty of evidense of working. Japan, Korea and now China are fantastic examples of how removing taxes, regulations and red tape and allowing capital to flow to equalise marginal productivity across societies results in higher wage growth in the poorer societies. Japan was a basket case in the 50's and was a world leader by the 80's. Likewise the wages in Korea skyrocketd in the 70's and 80's. China's wages growht has skyrocketed over the past 20 years and doesn't look like slowing down.

Wages of the lower class in developed economies aren't a good example to use because whilst their economies have been lowering taxes, there is this thing called globalisation which has been happening and this has resulted in investment flowing to developing economies and therefore wages of low skilled workers in developed economies have stagnated. This is trickle down economies in action, but at a global level. The capital has gone from the rich countries to the poor countries and made the workers in the poorer countries much much richer and the workers in the richer countries only slighty poorer, if poorer at all. It works. It creates a more equal world.

Does this mean that the rich should have lower taxes. Not necessarily. On capital they create and the wages that they earn I would say yes. Definately. On the capital that they inherit through no effort of their own, I say tax them through the roof.

tho, devil's advocate, ceteris paribus, like to like? what happens if those markets in Japan and Skorea are just opened up. arent they products of same good fortune so ascribed above?
 

blackcat

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OP is a very bad fail. On a Krugmanesque level

There are numerous examples of tax cuts actually seeing the rich pay a higher % of taxes. See tax cuts under Thatcher, CGT cut under Reagan etc. The real world evidence is rather overwhelming ie where tax rates are high cutting them will actually see the rich pay more because they have far less incentive to evade.

Recent example was the move in the UK to increase the top rate from 40p to 50p. Didn't go so well.



#reeducationcampsFTW

One wonders why there is such a strong correlation between countries with lower taxes and higher charitable giving

Ireland turned out great meds. unless you are Bono. I really fail to see how Bono qualifies to get the "artist" taxation provision. But I like Michel Houllebecq moving to Ireland from France.
 

blackcat

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OP is a very bad fail. On a Krugmanesque level

There are numerous examples of tax cuts actually seeing the rich pay a higher % of taxes. See tax cuts under Thatcher, CGT cut under Reagan etc. The real world evidence is rather overwhelming ie where tax rates are high cutting them will actually see the rich pay more because they have far less incentive to evade.

Recent example was the move in the UK to increase the top rate from 40p to 50p. Didn't go so well.



#reeducationcampsFTW

One wonders why there is such a strong correlation between countries with lower taxes and higher charitable giving

gave that post a "like" just for the hashtag on re-education camps. R underrated. Ask Stern Hu, or HU Stern. I reckon the camp will put the Stern in HU re-education
 

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Evidence seems to stack up against the theory, wealth of most Americans has stagnated or gone backwards, while the very rich have seen their wealth accumulate even further. Not much in the way of trickling down.
 
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Capital created definitely deserves a tax break as without it there is no pie for anyone to split so to speak. By wages on top I suppose you mean future profits down the track, to a point yes but where do you draw the line? A tax scheme structured for new capital could be structured in terms of capital and business start ups like an angel or venture start up where you pay no tax and/or are staked but the investor (in this case government) gets a massive return on their investment if the project strikes pay dirt.
Wages and rents on capital are pretty much the same thing in terms of affecting output. Tax wages and you reduce the incentive to work leading to lower labour supply and lower investment in human capital (education) which influences productivity. Tax capital and you reduce the incentive to create new capital which lowers the growth of the capital supply in the future. Both reduce GDP as they reduce the effective supply of resources which produce GDP and neither is more impacting on growth than the other. Again, the only tax that doesn't effect growth is inheritance tax or import tariffs (although tariffs negatively influence the ability to consume which is ultimately why we produce in the first place).
 
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Evidence seems to stack up against the theory, wealth of most Americans has stagnated or gone backwards, while the very rich have seen their wealth accumulate even further. Not much in the way of trickling down.
Um read the post on globalisation. It explains why wages in developed economies stagnated over the past 30 years is not evidence against trickle down economics. There was a shortage of low skilled labour 30 years ago compared to what would occur under a global capital market which inflated unskilled wages in developed economies back then, compared to what occurs under a global capital market. Opening up capital to the world massively increased the supply of low skilled labour to capital owners resulting in the return of capital to be spread more across the world rather than just benefiting the unskilled labour in the developed world.
 
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OP is a very bad fail. On a Krugmanesque level

There are numerous examples of tax cuts actually seeing the rich pay a higher % of taxes. See tax cuts under Thatcher, CGT cut under Reagan etc. The real world evidence is rather overwhelming ie where tax rates are high cutting them will actually see the rich pay more because they have far less incentive to evade.

Recent example was the move in the UK to increase the top rate from 40p to 50p. Didn't go so well.



#reeducationcampsFTW

One wonders why there is such a strong correlation between countries with lower taxes and higher charitable giving
This completely depends on the tax system in place (and the ability to evade) and the proportional size of the deadweight loses to GDP associated with the current taxes in place which will change depending on the size of the tax. In other words its a bit silly to make a universal statement as you have that lowering taxes on the rich means that they will always pay more taxes. There are some situations where it can, and if that situation exists then the welfare system is pretty screwed up, such as was the case back in Thatchers Britain. But in most developed economies these days your claim would most likely not be true.
 
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Society puts restrictions on how much we tolerate of human nature. There are instinctive elements to the desire for wealth and power, that is fine if you do not break the rules of society.

We have introduced a system of taxation which is a redistribution of wealth but have created numerous loopholes for people to circumvent this process. Our ATO will chase some average Joe through the courts to chase down some minor tax debt and audits numerous low income earners because their nickle and dime deductions looks too high but we turn a blind eye to massive abuse of the system.

If everyone doesn't play with the same set of rules then why should bikkie gangs have to obey rules which disadvantages them? What happens when the order of our society is just ignored? Those with wealth and power need only look at what happens when anarchy takes over, like the riots in England or the riots in the USA when order was lost. If the peons are not happy with their lot and they feel they are abused and taken advantage of by those with power and wealth the result can be bloody and brutal.

If we do not restore order in our country and correct or failing moral compass it is only a matter of time until a socialist movement takes over the country. Our government has been in power a nanosecond and it is already got the stain of corruption and abuse of power, while riding the campaign of honesty and trust.

If people lose faith in our ability to manage our affairs and they are unhappy with their lot in life then if the movement gains momentum it can catch like wildfire.
What moral compass do you think we should abide by? A moral system for the community has to be defined before we can determine whether we are failing to act by it. The first step to be taken to fix up society is to define a morality to govern it.
 
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Evidence seems to stack up against the theory, wealth of most Americans has stagnated or gone backwards, while the very rich have seen their wealth accumulate even further. Not much in the way of trickling down.


An interesting point you make. My guess is the rich move their money sideways or into blue chips where the risk is negligible. Take Australia, the rich tend to put their money in property (people always need somewhere to live and the market is rigged to generate a return) or in super funds which mine the blue chips but not really into new business or areas of growth. (A house for example is hardly productive econmoically).

It sounds counter intuitive but the poor actually by nature are higher risk takers than the rich. The reason being poverty sucks and money is very very hard to come by. Thus certain people are prepared to risk it all in a gamble to accumulate massive wealth that they otherwise can't get. That beats a futile lifestyle of not been able to afford the bills and death by 45 due to it. So the trick is to incentavise the poor and make it attractive to speculate and build their own wealth. The rich have money and they will not risk it on growththatmay be a bust. (This isn't an attack on the rich just an observation that they act on self interest same as anyone else). Things like tax break and possibly increasing the dole would help as it gives people a safety net to overcome I guess the uncertainty or fear of going alone or gives them piece of mind. (Never mind the arguments of dole bludgers, those people have mental health issues, factors rendering them unemployable or sickness as no one enjoys quality of life on welfare).

In truth I'm not optimistic. Successive governments seem to point the economic stimulus of the nation in entirely the wrong directions without any plan on what to do. It could easily go to s**t very quickly and Australia end up a banana republic after all.
 

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People with capital make business decisions, there may be exceptions in those who practice philanthropy, but they are few and far between. In a free trade system there needs to be sufficient state regulated taxation in order to provide for the rest of the population.
 

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Unfortunately I don't understand your question. If you write it in a different way I will have a go at answering it.

the argument is dumbed down to the most polarised opposites. a Chevez Venezeula protection v a Chicago boys neoliberal option.

No counterfactual offered. The debate and options, should not be an either-or. When the US manufacturing middle class work in Michigan with the cars in Detroit, and industrial hearts like Pittsburgh, when they go East, and all the American manufacturing is now done in China/Japan/Skorea, the middle class and average salary in real terms, went backwards over the last 40 years. There have been winners too, not just a production line worker in Detroit losing.

The debate can't be, Freidman and IMF/WorldBank v Venezuela.

And SKorea and Japan brought their middle class with them, and it is patently clear, that they were merely tapping the potential in their constituents, versus making their nations into Haiti or other Economic free zones or whatever they are called.
 
A part of a properly operating society is taxation. The debate of what level of taxation and having the most efficient and fair system will always be debated but globally it seems a 15% GST, a 25-30% corporate tax and a personal income rate similar to corporate rates is where things are trending.

Personally I would like to see property taxed at higher rates as property prices are too high causing unnecessary financial stress on families and business alike.....but that is another story.


I am not adverse to tax breaks and holidays for start up industries but there needs to be a clear path for full taxation within a few years. We have seen the car industry being subsidised needlessly for years which on one hand is a key industry but a failing to deal with the real issue and that is red tape, green tape and wages. The cost of an employee in the car industry is $100k pa. I am not sure what a fair wage for a factory worker is but I fairly sure $100k is not it.

Singapore has built a number of industries such as finance, commodity trading and IT on tax holidays. We have a lot to learn from Singapore in that regard but we must not loose sight they have slave labour from Indo, Philippines and the sub-continent. This later concept is hideous and we need to ensure we never have the situation in Australia where we tolerate this slave labour concept.


In short, trickle down economic theory is not sustainable but could be used very carefully to grow industry, attract capital (including human capital) and enable Australia to become world leaders or a centre of excellence in a sector. Any tax break must be for a limited period as we all need to contribute to our nation.
 

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Richmond
An interesting point you make. My guess is the rich move their money sideways or into blue chips where the risk is negligible. Take Australia, the rich tend to put their money in property (people always need somewhere to live and the market is rigged to generate a return) or in super funds which mine the blue chips but not really into new business or areas of growth. (A house for example is hardly productive econmoically).


actually, i will think you find it is more from the Mitt Romney school.

Romney may or may not have, i cant remember, had a "blind trust" when he was running for POTUS. The scepticism is implied. But he had alot of his money in hedge funds or VCs that were "restructuring debts" around, or in the wake of, the aftermath, of the GFC. Things like state pension funds, state insurance (health insurance this is) etc.

The margin and profits made on those post GFC debt restructures, were enormous. And it was the gov't bailouts too that were the product of all those revenues.

Those connected individuals, have different avenues for making green.

hey medusala what were you implying re: easier for domestic hedgies to make money here? easy because the market is less liquid or efficient (priced). Or less whales and smarts who take opportunities here? So you get a softer intellect cherry picking?
 

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