The “Trickle-Down Theory” Exposed

7 Jan

Economist Thomas Sowell has a recent column titled “The Trickle-Down Lie”, in which Dr. Sowell reminds us that the oft-used phrase by the left, the damnable “Trickle-Down Theory”, is not a real theory at all, and “trickle-down” is found in no reputable texts.  He also mentions that high-profile, even far left, Democrats from the past have, in fact, cautioned against over-taxing the economically well-to-do.  The “Lie” being that conservatives have grasped onto this “theory”, to the detriment of all humankind (or so we might believe).

The full column can be found at

. . . but here is an exciting excerpt:  [Emphasis is mine]

New York’s new mayor, Bill de Blasio, in his inaugural speech, denounced people “on the far right” who “continue to preach the virtue of trickle-down economics.” According to Mayor de Blasio, “They believe that the way to move forward is to give more to the most fortunate, and that somehow the benefits will work                         their way down to everyone else.” . . . .

The book  “Winner-Take-All Politics” refers to “the ‘trickle-down’ scenario that advocates of helping the have-it-alls with tax cuts and other goodies constantly trot out.” But no one who actually trotted out any such scenario was cited, much less quoted.

One of the things that provoke the left into bringing out the “trickle-down” bogeyman is any suggestion that there are limits to how high they can push tax rates on people with high incomes, without causing repercussions that hurt the economy as a whole.

But, contrary to Mayor de Blasio, this is not a view confined to people on the “far right.” Such liberal icons as Presidents John F. Kennedy and Woodrow Wilson likewise argued that tax rates can be so high that they have an adverse effect on the economy.

In his 1919 address to Congress, Woodrow Wilson warned that, at some point, “high rates of income and profits taxes discourage energy, remove the incentive to new enterprise, encourage extravagant expenditures, and produce industrial stagnation with consequent unemployment and other attendant evils.”

In a 1962 address to Congress, John F. Kennedy said, “it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.”

This was not a new idea. John Maynard Keynes said, back in 1933, that “taxation may be so high as to defeat its object,” that in the long run, a reduction of the tax rate “will run a better chance, than an increase, of balancing the budget.” And Keynes was not on “the far right” either.

[End of excerpt]

Now, it is fair to argue just what level of taxation begins to turn the curve the wrong way, but it is entirely disingenuous to assert that “lowering taxes to increase revenues” is just another dumb idea from the far right.


2 Responses to “The “Trickle-Down Theory” Exposed”

  1. Dapper Dan January 7, 2014 at 9:31 pm #

    Thomas Sowell rocks!

    • illero January 8, 2014 at 1:06 pm #

      My favorite writer. He has a very insightful take on things. Thanks for visiting.

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