‘Trickle down’ is not based on reality

Monday, Jan. 1, 2018 4:07 PM

Rep. Scott Tipton and Sen. Cory Gardner have “voted to reform our broken tax code” (Journal Dec. 22) with the idea that reducing the corporate tax rate from 35 percent to 21 percent will encourage businesses to invest in plant and equipment, and hire more workers. This is commonly called trickle-down economics.

But it doesn’t work like that. Businesses expand when they can’t meet demand with their current set-up. Rep. Tipton is a businessman – he knows this, and I expect Sen. Gardner knows it, too. And for the few businesses that do use this new-found money to upgrade, it will almost certainly be to make workers more efficient, which means there will be fewer jobs, not more.

What drives the economy is demand. Demand is increased by getting more money to those who spend. People in the lower income brackets tend to spend nearly all their income. But wealthy people tend to save and invest when their incomes increase. And this tax change (I can’t call it reform) gives the largest tax breaks to the wealthy.

It will certainly make Wall Street happy. You know, the Wall Street that caused the Crash of 2008.

And that roughly $1 to $1.4 trillion addition to the national debt? Well, that is a different (scary) story.

Gala Pock

Pleasant View