The Problem with "Trickle Down" Tax Cuts

As I understand it, the "trickle down" theory says that if the top tax rates are reduced, those in the top brackets will put the money into business activities which will hire lower-bracket people. Those people, in turn will spend the money they get, which will support a growing economy. The increased wage and business income will lead to additional tax revenue which, it is claimed, will balance the revenue lost when taxes were cut.

Thus, the benefits are largely dependent on additional money finding its way into the pockets of those in the lower tax brackets. Lowering the top rates is a means to that end. It seems to me that, instead of the two step process of trickle down, it would make more sense to focus the tax cuts on the lower brackets and increase the refundable credits in order to benefit even those who have no tax liability.

Another thing which would help drive the expansion of the economy would be what is generally called "universal basic income:" a fixed amount, sufficient to provide necessities of life, given monthly to every resident (possibly less for minors living at home). For the unemployed and those living paycheck to paycheck, this would represent a significant increase in spending power, leading to a significant increase in spending, further stimulating the economy. Businesses would expand, producing the goods most people need and want.

Unlike "trickle down," which depends on the wealthiest to use their tax savings in ways that put money in the hands of the less well off, lowering the taxes of the less well off and (or) providing a universal basic income will accomplish directly what trickle down can only accomplish indirectly and with a real possibility of some of the lost revenue going to other things (e.g., foreign travel, investment, or purchases).

Quotidian Activities

In the past month or so, there have been a few things that may be worth writing home about.


Birthday/Anniversary  My brother's wedding anniversary is also his wife's birthday. I procrastinated on sending gifts until the day before. At that point I e-mailed my brother and asked him to get something for her and something for them and bill me via pay-pal. He cooperated, and it worked out pretty well. I'd have liked to do a next day delivery order on amazon, but the Japanese site is, unsurprisingly, in Japanese, and I don't think they take American credit cards. I recall trying once. I found something by following pictures, but I couldn't complete the transaction. So this was better. Maybe sometime I'll learn to shop early enough.


Taxes  For a long time, I used to file my tax returns early — meaning before noon on the day they were due. This year I filed super early — the evening before the due date — using an on line filing system. Sometimes I've owed the feds some money, but never the state. This year, I owed money to both. I guess I'll have to have them take more out of my IRA when I take my next distribution, or else make estimated tax payments.


Car  I have a 1997 Toyota Camry which has a little over 88,000 miles on it. Last year, the mufflers got holes in them, and it became loud, even getting louder as time went on. Last week, I finally took it to a muffler repair shop, where they also found work that needed to be done on the steering and suspension and on the brakes. They also changed the oil and some other fluids and performed the overdue state safety inspection (which it could not have passed before I replaced the exhaust system). Total price, including sales tax on the parts, was $3,000.07. Of that, something over $1,200 was for labor. Since the car was in the shop about five hours, that means they're getting over $240/hr. Nice work if you can get it. Apparently, the labor costs are set by the company — a large chain — for each job performed, since the invoice gives identical amounts for several of the jobs.

It was a higher price than I had anticipated, but then I've been neglecting things for some time, and if this lets me keep the car on the road for another 17 years, that's less than $200 per year. Besides, I put it on my credit card, so it didn't actually cost me anything.


Restaurant  With the end of the concert season, my season for dining at Scollay Square also comes to an end. So last Friday I told them I probably won't be back until October. Wendy the waitress is my favorite since Seth shifted to bartending, and I was at one of her tables. Before I left, she told me that she might get a job in her field of study, which has to do with sustainability and interior design.Of course I wish her well, but I do like having waiters who, when they realize I'm something of a regular, become friendly. So if she stops working there on Fridays, I'll miss her.

There was a party of three at a nearby table and Wendy told me that they were involved in some sort of convention that was going on in Boston. It turns out it was something called Q Talks. The older man in the party was the pastor of the church where it was mostly happening, Tremont Temple, and his wife and son were with him. Wendy told them something about me, and the pastor came over and introduced himself, and I told him something about myself. I learned that he's been involved in high-level ecumenical dialogue as one of the evangelical representatives who have met with Cardinal Kasper and the Vatican agency for promoting Christian unity. I gather that this year's Q Talks became somewhat controversial in church circles because they had panels on the church and gay people which included some participants who favor gay marriage.

As I was finishing my dinner a couple of nice-looking guys were seated at the table beside me. I heard them discussing what they would have, and they didn't seem to be settling on things, so I recommended the miso glazed salmon, which is my favorite dish on the menu. They both ordered it. Unfortunately, I had to leave for the concert before theirs arrived, so I'm not sure how they liked it. But if they like salmon, it's hard to imagine that they wouldn't have liked it a lot.

Doings

Cinema  I went on Monday evening to the Cabot Street Cinema to watch "The Way," a movie about a man (played by Martin Sheen) who walks 800 km on the pilgrim way to Santiago de Compostela, along with three other characters he meets as he goes. It's part travelogue, part explanation of the pilgrimage, and part character development. I'm not sure what I think of it. Maybe I'll think some more. Meanwhile, if it comes your way, I recommend watching it.


This was my second time in that theater. The first time was also for a religion-themed movie set in Spain: "There Be Dragons," about St. Jose Maria Escrivá, mostly during the time of the Spanish civil war.


In a couple of weeks they'll be showing "Anonymous," which pushes the thesis that the works of Shakespeare were written by Edward de Vere, the Earl of Essex. I hope to get to see it. The idea that the author of the works of Shakespeare knew too much to have been the actor from Stratford has always made some sense to me.




Taxes  I just mailed my tax return for 2009 to the IRS. It was finished in draft by the deadline, May 11, 2010, but I got busy with other things and never made the final copy to send in. And since I'm owed a refund there was no urgency, since there would be no interest or penalty for late filing. But recently there has been a series of letters asking for the return. The latest threatened to assess me $9,411.30 in taxes, interest, and penalties on top of the $3,384.00 which had been withheld. The prospect of having to pay them $9,400 when in reality they owe me $1,186 got my attention. So I sent in the return to claim my deductions and adjustments.




Not Done  For the first time in several years, I decided to skip the Handel and Haydn Society's annual performance of Handel's "Messiah." I had a bit of a cold and so I decided not to go to Boston on Friday evening or Sunday afternoon. Instead, I took echinacea and stayed home both those times — which gave me the chance, as reported on my other blog, to listen for the third time in four days to John Harbison's fifth symphony.


I think it was the right decision, even though "Messiah" is the better work IMO. My cold is almost gone, and I should be able to go to Boston on Thursday to see the play "Captors," about Adolf Eichmann and the Mossad agents who have just captured him, as they try to get him to agree to go to Israel for trial.




Shades of Torchy and Setboyardee  Today is one of my two lottery days, so I went to the store where I usually get the tickets. The regular clerk was there. I think he's from India. Anyway, at the end of the usual transaction he wished me good luck and a good evening, smiling, and leaned slightly over the counter toward me. It actually felt, in that instant, as if he were leaning in to kiss me. Absurd, I suppose, and no doubt it says more about me than about him.