Sure it's simplistic, but in the face of the reams (literally) of info that is included in the Income Tax Act, I think that it is a decent summary that has a basis in reality.
No argument about that. The definition of summary is to simplify.
In the end, there are a few messages:
- A progressive tax rate results in people paying differing amounts based on income.
It seems to work, for the most part.
- The higher the income, the greater percentage that is contributed.
Like I said, percentages can be deceiving, though. In your beer example, it gives the impression that those at the bottom end that actually did pay some of the cost of the beer actually gained more than those at the top. They didn't really because, for instance, a 2% reduction of $1K income leaves a lot less than a 2% reduction in a $100K income. The tax rate for those making the $1K per month is 15%. Drop that to 13% and the reduction results in paying $240 less per year. On the other hand, dropping 2% tax rates on an income of $100K per month results in paying $264K less per year. Percentage-wise, the differences are 0.50% and 0.0455% respectively. Considering all the things that you can do with an extra $240 as opposed to all the things you can do with an extra $264K, who do you really think does gain more by the 2% reduction?
- Access to common services remains equal (in theory).
lol Except, for instance, when you have banks et al making policies forbidding you to invest anything less than $50K without sacrificing a significant percentage of return for the investment. There are other examples of restrictions like that but one is enough.
- Potential ramifications relative to scaring-off the demographic that pay the highest rates.
hehe There's always a potential for someone to whine about anything.
You can read through the income tax act, develop the applicable scenarios and speculate on the result(s), but in the end; I'll wager that the beer ****ogy is a lot closer to reality than you will care to admit.
I have no problems with its intended descriptions, but it fails to take into consideration the peripheral effects, as I keep indicating.
The phrase: "the dude making 100K a month will make a lot more money from it" really caught my attention. Firstly, the guy at $100k/month is still paying the top rate at a higher percentage. Second, this person won't be 'making' any money from it; they will be paying less.
It sounds like splitting hairs here but the difference is significant
You didn't quite grasp what I meant, but I described what I meant in more detail above.
This comment is not designed as a defense of Reagan, quite honestly, when he was in power, I was at an age where I didn't care.
No worries, Reaganomics was just an example.
Regardless, teh specific pressures and influences that guided policy back then were unique to those circumstances, no different than the reality that Obama is faced with unique circumstances... This is not offered as an excuse for anyone, but rather a comment that says basically 'hindsight is 20/20'.
I realize that. The basic principle of trickle-down is the same, though. Not every example of trickle down is the same as another because people take the basic idea and adapt it to their situation.
Perhaps the only reasonably objective way to assess the effects (after the fact) would be to speculate on what might have happened if an alternate policy was adopted... Yep, I understand that it is a useless exercise, however, (using the Reagan example), had he done something different doesn't automatically mean that it would have been more effective
Not in his case, no, but if he hadn't dropped regulations guiding rich corps. et al, it may have had an effect that left them no alternative but to hire more people or invest more in R&D instead of acquisitions and mergers.
Let's be realistic, neither Reagan nor Obama individually made their economic policies. They were made by the advisory teams that later guided the President.
True, but that's basically immaterial. Most people realize that governing isn't done by a single person.
Again, don't know much about Reagan, but I can say that Obama has added $6 trillion in debt and in my opinion, done this at the worst possible time for poor reasons.
Quite. And his trickle down, splurging spree was not nearly as effective as it could have been because it was misdirected and threw money out willy-nilly instead of being careful in its targets (among other dumb reasons).
Alright, what would be a solution that you would propose if you had the ability?
Rearrange trickle down so that a tax reduction is also graduated and use caution or regulate where the monies from tax reductions went. The basic premise of an economy is that small and medium sized businesses are the backbone of an economy, so I'd rather boost those than give benefits and whatnot to large corps.
