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Trickle Up Economics - Scott Adams' Blog

Trickle Up Economics

In the recent debate, Vice Presidential candidate Joe Biden said the wealthy would gain by paying higher taxes to lift up the middle class. The theory is that a healthy middle class is necessary for the wealthy class to thrive. Let’s call that Trickle Up Economics.

Viewed in that light, the unwealthy are more like an investment opportunity than a tax burden. If you can make the poor and middle class more educated, healthy, and better employed, everyone wins. That makes sense, to a degree. But would the wealthy gain enough financially to make the extra taxes a good investment? I wonder if that has ever been studied.

Perhaps there are too many variables to make any kind of general statement about the benefits of taxing the rich. If the government raises taxes on the wealthy and pisses away the money on sketchy wars and pork, that’s probably a poor investment. If the money goes into education, healthcare, and alternative energy, that starts looking a lot more like an investment with a 10-year payoff.

Obviously higher taxes on the rich are counterproductive if it stops them from building new factories, or causes them to invest overseas. Maybe corporate taxes have to remain low no matter what, or everyone moves their operations to Ireland. You can always tax the individuals, since most people won’t leave the country just to save money on taxes.

Henry Ford famously paid his factory workers more than the market rate so they would be able to afford cars. I’ve never seen a study of how that worked out for him. Does anyone have a link to tell me if investing in poor people benefits the rich?