Top Down Economic Policies

It amazes me how confused people get when discussing economics.  I would not be amazed if they were confused as to how the elasticity of demand is one of the most important things for companies to understand when deciding the marginal product they want to supply.  That's confusing and I do not know all that goes into that.  But understanding the media frenzy that is covering this so called "top down" economic approach should be much easier.

The Republican candidate for president, Mitt Romney, I believe wants to reduce all marginal tax rates by roughly 20%.  He also wants to eliminate enough loop holes and cut spending enough to make this change deficit neutral.  Eliminating loop holes meaning the deductions that many companies take advantage of in order to get around paying taxes.

Obviously since the rich and upper class citizens pay the most taxes and the highest marginal tax rates already, they will receive the largest tax cut.  When the poorest 50% of Americans pay around 3% of the taxes, how can you give that group a comparable tax cut anyways?  The fact is when it comes to Federal Income Taxes, the rich pay the most of the taxes by far.  Thus they will receive the largest tax cut.  That should be simple to understand.

Furthermore, cutting taxes for those making over $250,000 a yr in income/profit will cut taxes for the most important among us.  That is the larger of the "small businesses" in our society.  These companies are responsible for most of the jobs that are lost or created in our nation.  These companies usually file their taxes under individual taxed income and thus to reduce their taxes you have to cut taxes on the very rich.  Why do this?  If you cut taxes on people who create jobs and produce goods, they will be willing to produce more and thus hire more workers.  It allows them to invest more money to expand their business which is what we need right now with unemployment at 8.2% and the real unemployment being much higher than that when you calculate those who have stopped looking for a job because of discouragement or have taken a part time job for the moment.

The purpose of taxation is to raise money for the government to provide services.  The best way to do this is by raising money without impeding the economy.  That is what Mitt Romney wants to do.  Or at least that is what he says.  Forget about politicians for a moment.  That is what I and other people who understand economics wants.

Those who are against the "top down" approach are people who do not see taxation this way.  They see taxation as a way to more equally redistribute wealth.  To take from those who are the richest and most successful to help those less fortunate.  That sounds good even if it is immoral from a liberty standpoint.  But even if you think its benefits outweigh the costs when it comes to the morality argument, how about the economic argument?  If you tax the rich and the businesses who hire people and the economy continues to slowly progress or even go back into another recession, millions of more people will be negatively affected for many more years than would have benefited short term by the benefits of receiving government assistance through higher taxation.

I for one want to use taxation the way it needs to be.  Raise money for the federal government to do what the Constitution allows it to do while not impeding the economy from being a well oiled wealth creating machine!