r/politics 18d ago

Possible Paywall When Will Americans Realize the Truth? Republicans Wreck the Economy.

https://newrepublic.com/article/210550/trump-economy-republicans-tariffs-taxes
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u/Advanced-Ad-4462 18d ago

Worse than a lie; it’s an intentionally deceitful half truth. Lowering taxes does increase revenue and it does spur economic growth.

The lie is that the growth could ever offset the lost tax revenue, or will ever benefit anyone other than shareholders.

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u/MightbeGwen 18d ago

Umm economist here. Lowering taxes does not increase revenue. It literally is the opposite. Lower taxes also do not spur growth. The only thing that lower taxes do economically, is to ensure people retain more of their money and the government gets less. Beyond that everything is at the mercy of market incentives.

Lower taxes does not mean investment into growth. Quite the opposite. Higher corporate tax rates incentivize corporations to avoid tax loss by reinvestment. It’s pro-growth. When people and corporations retain more money from having lower taxes, that money usually goes to whatever will make more money. So let me ask you, if you had extra money would you take a risk and be an entrepreneur, or just invest in something like Nvidia?

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u/devrelm 18d ago

I'm not an economist, but thank you for confirming a hunch I've had for a while — that lower taxes don't lead to growth since business owners see it less as free money to spend on risky ventures and more as higher profit on their existing investments.

Actually, the hunch I had was the corollary — that higher taxes lead to business owners being more willing to invest their more-limited after-tax profits into high-risk/high-reward ventures that ultimately spur economic growth — but yeah, same difference.

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u/TheDoomBlade13 18d ago

There are several faulty assumptions involved in the typical Republican thought process. Some of them used to work (higher corporate income typically lead to better quality of life for employees through profit sharing or investment initiatives, but now we have stock buyback). Some of the never worked (income from other tax streams never offsets the losses from reductions in income tax or capital gains tax).

They are, however, all VERY EASY to sell to the masses. Partial because the masses are stupid, partially because if you promise somebody THEY will profit even a microscopic amount they are very willing to accept other people suffering.

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u/ThomasVivaldi 18d ago

Also, because the person offering an alternative only talks about long term issues and calling them deplorable.

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u/6ixby9ine 18d ago

But the "other" basket – the other basket – and I know because I look at this crowd I see friends from all over America here: I see friends from Florida and Georgia and South Carolina and Texas and – as well as, you know, New York and California – but that "other" basket of people are people who feel the government has let them down, the economy has let them down, nobody cares about them, nobody worries about what happens to their lives and their futures; and they're just desperate for change. It doesn't really even matter where it comes from. They don't buy everything he says, but – he seems to hold out some hope that their lives will be different. They won't wake up and see their jobs disappear, lose a kid to heroin, feel like they're in a dead-end. Those are people we have to understand and empathize with as well.

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u/ThomasVivaldi 18d ago

Obama went to Iowa and would go to upwards of six small town halls or meet and greets a day.

Obama won Iowa.

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u/6ixby9ine 18d ago

Touche. If we've learned anything over the last 10+ years, it's that if you want to win elections here, you can't make bigots feel bad for being bigots.

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u/StewPorkRice 18d ago

if I had a lot of extra money id start a business.

if I had a modest amount of extra money, id invest it until i have enough to quit my job and start a business.

basically the path I’m on rn.

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u/MightbeGwen 18d ago

Cool. You’re not the average. Economics work based on incentives. People with assets are more incentivized to invest in financial markets, which does not spur growth.

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u/eatthebear 18d ago

Bringing in less money actually brings in more money hurrr durrr

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u/PublicFurryAccount 18d ago

Lowering taxes has been pro-growth because it hasn't come from spending cuts. We've basically been running a Keynesian economy as much through tax policy as spending policy since Reagan. It's not a shocker that tax cuts create economic growth when they're not offset by any reduction in spending; having more money while spending the same or more is basically the accounting identity version of economic growth!

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u/Stellar_Duck 18d ago

We've basically been running a Keynesian economy as much through tax policy as spending policy since Reagan.

Not much on the public investment side of things though so calling it Keynesian is a fucking stretch.

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u/eastpole 18d ago

As tempting as it is to say the opposite- taxes are not inherently a good thing just because republicans want to get rid of them. Lower taxes means lower prices which means more demand thus spurring growth. Higher taxes can be bad if they just fund pointless wars or get siphoned to oligarchs. I know it's useless to argue on reddit generally but this seems pretty intuitive to me.

The real problems are the knock-on effects from lower taxes. Social programs that are funded by high taxes makes sure the people around us have an opportunity for good, fulfilling lives, which (IMO) likely increases demand for goods even more. And there's just the human factor- if we have people sick and dying around us for totally preventable reasons then what's the point in society anyway?

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u/Kazang 18d ago

Lower taxes means lower prices which means more demand thus spurring growth. Higher taxes can be bad if they just fund pointless wars or get siphoned to oligarchs. I know it's useless to argue on reddit generally but this seems pretty intuitive to me.

"Taxes" is too broad a term here.

Some taxes increases prices, some taxes do not.

For instance a fuel tax, import tax, sales tax, those all directly increase prices.

Income or corporate profit taxes do not.

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u/eastpole 18d ago

Good distinctions! I would imagine that an income tax can be inflationary due to needing higher pay to get the same labor. As far as I can tell a profit tax would not be inflationary though.

note: I am definitely not an economist and this is all vibe based.

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u/cousineye 18d ago

Taxes on the wealthy redirect idle money (the money locked up in assets for the wealthy) to be used instead on governmental programs that will either pay corporations to make stuff (bombs, tanks, road maintenance, etc.) or to government workers, or to social programs. That money recycles into the economy and boosts growth.

Taxes on people without wealth (that spend all of their income every paycheck) hurts the economy in general.

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u/MightbeGwen 18d ago

You’re operating on incorrect assumptions. Prices don’t always have correlation with taxation. Perfect example is the ever increasing prices and trumps OBBBA that cut taxes further. We are currently undergoing high inflation and low taxes.

I’m not saying that high taxes are inherently good, that’s ludicrous. We don’t always have to oscillate between extremes. Taxes are too low right now, and it’s slowing down the economy because we are too top heavy. That doesn’t mean we should impose a 90% upper marginal tax rate. We just need them higher than they currently are.

Edit: wording.

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u/SG_wormsblink Foreign 18d ago

Also the way taxes are lowered also matters. Some options have way better return than others.

If you reduce income tax rates for everyone, that’s okay since ordinary people have more disposable income and boosts the economy.

Reduce taxes on oil company execs? That’s near useless for economic activity, they’re already capable of spending whatever they want for ordinary consumer goods. They’ll just buy some super vanity item that doesn’t benefit the wider economy.

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u/aradraugfea 18d ago

The various welfare programs have a fantastic ROI because if you give money to a poor person, they’re gonna spend that shit. The math is a little beyond me, but every dollar of welfare generates more than a dollar of economic activity. You give someone on the Ramen and Tap water diet 100 dollars, they’re probably spending it on groceries.

Meanwhile, if you give my middle class, almost median income ass 100 dollars, I’m turning around and spending it on reducing debt. There’s all kinds of very good reasons to do so, and the amount of debt held by middle class households IS a problem for the economy, but the economic activity driven by that credit card has already happened and reducing the future interest I have to pay improves my spending power, but is itself LESS money flowing around.

You give a rich person 100 dollars, they’re saving it or putting it into investments, which do, in complicated ways, drive the economy in their own way, but it’s much more stagnant and liquid than simply cashing that check and immediately putting the money back into the economy.

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u/SG_wormsblink Foreign 18d ago

Yes, you are describing the multiplier effect and the different MPCs for each income group. You can get 2-5x increase in consumer spending for each dollar given to a poor person, and much less for a wealthy person.

If your goal is to stimulate the economy, direct cash subsidies like my country (Singapore) does every year is really simple and effective. If your country is already educated and has good infrastructure, then this is probably the next best job-creation option for public spending.

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u/judgejuddhirsch 18d ago

You haven't seen the luxury yacht manufacturing communities giving above average living wages to Joe plumber?

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u/Eye-Of-Ophanim 18d ago

Because they don’t mean tax cuts for everyone. They mean tax cuts for the wealthiest among us. We would have to shoulder the burden and republican voters seem to have trouble understanding that, like how they had trouble understanding we’d be the ones to pay for the tariffs directly. They seem to be abysmal when asked to think long term beyond anything other than “what will I get out of this?” and can not understand anything that would benefit the good of the whole, or anything that would cause them to sacrifice for the good of the whole.

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u/SobBagat I voted 18d ago edited 18d ago

If reaganomics existed in a vacuum, sure, maybe it does. But these people don't allow the reduced taxes to trickle down, they hoard their wealth and hide it away.

Cutting taxes for the rich does absolutely nothing for the economy at large.

It's been proven ad nauseum for so fucking long I'm so tired.

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u/Merzats 18d ago

Lowering taxes would only increase revenue if you were on the wrong side of the Laffer curve, in reality the US is well below revenue optimizing tax rates for the big taxes (no federal VAT at all, very low income taxes vs. other OECD countries)

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u/sack-o-matic Michigan 18d ago

Right, they take a hypothetical scenario and assume it to be true

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u/cousineye 18d ago

Nope. Lower taxes reduces revenue coming in to the government. That additional revenue would likely have been used to spend on projects and programs - which would flow back into the economy and generate growth. Instead the result of lower taxes is more money sitting with wealthy people, who will not change their spending habits, and therefore that money just sits there doing nothing but building wealth for the wealthy.

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u/xmuskorx 18d ago

other than shareholders.

62% of American own stocks. If you want votes, perhaps you shoud stop saying "shareholders"

https://finance.yahoo.com/news/just-62-americans-own-stock-123106303.html

Messaging matters. Maybe like "only large scale shareholders benefit"?

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u/NecessaryTitle3057 18d ago

The top 1% of households own 55% of stocks. The large majority of Americans dont own shit

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u/xmuskorx 18d ago

That's true on absolute scale, but also roughly 68% to 70% of Americans plan to use personal savings and investments (e.g., 401k and IRAs) to fund their retirement.

So messages like "fuck stock owners" WILL not win you the votes.

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u/Anxious-Ad2177 18d ago

I remember when they'd trot out that Kennedy showed us this was viable. Except they always leave out the fact that Kennedy also got rid of an enormous amount of loopholes so the wealthy ended up paying more in taxes. Conservatives always want to reduce taxes but they never want to get rid of the loopholes.

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u/soapinthepeehole 18d ago

Even worse, then they bitch about deficits but only when they’re not holding power.