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Chet Ruminski Wrote: Any major tax cut has been followed historically by a recession. Trump says all the extra money will create prosperity . This is no different than trickle down economics. The poor people will spend the money and the rich people will invest it an economy that is promoting zero velocity. Cutting taxes will worsen the economy for the majority.
Cutting taxes for or raising taxes on rich people does very little to the economy - good or bad. This is because of the propensity of rich people to save their marginal incomes. In other words, unless the tax cuts or increases are extreme, cutting taxes on rich people will for the most part add "idle" balances in the banking system, while raising taxes on rich people will for the most part remove "idle" balances in the banking system. All else equal, the government deficit would end up higher/lower if you cut/raised taxes on rich people, and total spending and employment in the economy would be close to the same.
That's why Jamie Galbraith, an MMT supporter, who wrote the prelude to Mosler's book 7DIF, called for higher taxes on rich people to retire "idle" balances and reduce the government deficit as a form of political compromise with the Deficit Terrorists. If rich people insist the government deficit is a problem, let them be the ones to pay for the deficit reduction.
There is no fiscal or monetary problem with what Trump is proposing. His ridiculous tax cuts for rich people will add otherwise permanent government deficits and accompanying balances in the banking system that will never "pay" for themselves through the magic of trickle down economic stimulus. In short, it solves no economic problem and does not cause one. It simply adds to the liquid moat of cash surrounding rich people.