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Trickle down that 3 trillion dollars July 22, 2010

Posted by fetzthechemist in Uncategorized.
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I just saw an estimate that the Bush tax breaks for the wealthiest Americans and US companies gave away a cumulative 3 trillion dollars in Federal taxes. According to the hallmark philosophy of Republican economics, this 3 trillion benefited the US economy because its effects are trickled down throughout.

No economist has ever proven that this trickle down effect actually happens in a way that would be more beneficial than the tax money that it replaces. Studies have shown that in the past 25 years, since the Reagan era first touted this concept, that US companies use the moneys to build and acquire overseas operations to offshore work. This resulted in millions of jobs shifting to India, china, Bangladesh, and other nations.

The US tax policies were a double boon for multinational companies. They funded these moves and the costs were deductible musiness expenses. The US paid for this suicidal job shifting.

The other area that companies used the money for was in acquisitions and mergers. Saved money on taxes did not get reinvested in building the business. It got invested in buying out rivals, lessening competition, and the resulting huge downsizing after these acquisitions and mergers. Another suicidal move funded by lower taxes.

Yet, Republicans still persist in claiming high business taces hurt jobs. They might hurt the bonus structures of CEOs, but for most rank-and-file blue-collar and white-collar workers, they prevent these two stupid, narrow-minded, bottomline-oriented strategies.

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