Basically the idea behind cutting taxes on the wealthy is that they will then invest it in the economy, starting businesses, building factories ect. It will increase the capital available, spurring the economy. The problem with that theory is while some more capital will be available because of the tax cuts higher federal deficits mean that the government is borrowing more. When the government borrows it takes money out of the capital pool that could otherwise go to businesses to create jobs ect. (i.e. a mutual fund buys treasury bonds instead of investing in stocks). So in the end, its pretty much a wash. Tax cuts make more capital available, deficits reduce the amount of capital, the economy stays in the shitter while my generation (I'm 20) is stuck wth massive federal debt that will take a lot of taxes in the future to pay off.
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It won't do much of anything. All it can do is put money back into circulation which causes people to go out and buy things which causes the seller to have to replace that merchandise with more which puts more money into circulation because the money paid to the manufacturer is gong to be used to pay stockholders and employees and to buy raw materials which are used to make the product that is sold back to the store so someone can buy it and by doing so put money into circulation which is used to create jobs and ................
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Incidentally, that really isn't true. It's not like the government is sitting on these pils of cash that it doesn't spend. Government spending creates jobs just as surely as private sector spending does. In fact, classical economic theory says that to pull an economy out of a recession the government should spend more to stimulate it. Read Keyenes (can't remember how to spell his name, famous early 20th century economist). Thats how Clinton got us out of the recession of the early 90's. Raised taxes, spent more, balanced the budget, things were golden.