Trickle-down can be (very loosely) characterised as the idea that reducing the tax burden on the well-off is, in the end, good for everyone. A wealthy person’s taxes are reduced and his disposable income increases. The wealthy person spends the extra income on a new mansion, or luxury goods, or lavish holidays. The estate agent, the luxury manufacturer and the tourist resort’s profits increase. Those firms then invest the profits, expanding their capacity, creating new jobs in the process. That additional investment boosts income and employment. The economy grows, bringing in more tax revenues (more, indeed, than were forgone through the initial tax cut). The size of the state is reduced, the freedom of the population grows and general prosperity is enlarged.
Posted on: Tue, 20 Jan 2015 08:06:45 +0000
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