What are the factors that affect an economy?

Trickle Down Economics Assignment Help

The economy in a country is the most significant element. You will not see a balance in the country if the economy is not stable. The government issues different economic policies to maintain a balance and keep things stable. Now, different theories in economics assume that an economy can be uplifted with its implementation. Trickle-down economics is one such theory that assumes that implementing it can impact society. The theory proposes that the taxes on businesses and the rich should be decreased to improve business investments, which will benefit society. The theory implies a lower tax burden on the upper section of society. But do you think it will be justified to do so? Will it ever improve the economic conditions of society? It is essential to understand the theory properly to make a decision. Following the following, few sections will help you learn more about it.

Trickle-down Economics doesn’t Work.

Do You Agree?

The cutting down of taxes of the wealthy will not be justified, to begin with. You need to have valid grounds to do so. The middle class is the ones who struggle to earn their livelihood. The wealthy have the resources to run their livelihood and must volunteer to help society at large. The implementation of the theory was not possible until a few doubts were cleared. It was not clear if cutting down the taxes will help increase employment opportunities. Also, there will be no impact on the expenses of a common man. You need to look into these grounds if you propose to implement the theory to improve the economy. The theory did not promise any of these. The wealthy will only become rich and will get the benefit of paying lower taxes. The middle class will not be benefitted from the implementation of the theory.

If you go through the above passage, you will understand why the trickle-down theory will not work. You need to understand these points to conclude. It is essential to learn each aspect of the theory to decide on the same.

Why Doesn't Trickle Down Economics Work?

Several wealthy nations adopted trickle-down economics. To date, many countries slash taxes from the rich and the corporate. If you go through the economic conditions of those nations, you will see that the economy has not been affected by the policies. The tax-cutting has only benefitted the wealthy, and they have become richer, thanks to the trickle-down economics. So, if you look into such points and try to understand, you will see the theory does not affect any economy. The fact that trickle-down economics did not succeed is evident when you look at the job opportunities around. Many are still looking for a job despite having the necessary qualifications. The idea of having trickle-down economics was to benefit society and the people at large. You will not see any such benefits in any of the countries that follow the theory.

The idea of implementing any theory is to benefit society, which means each person must do their bit. In this particular theory, the wealthy must take responsibility and share their saved amount for the benefit of society. It never happened. Instead, it helped make them more money. Hence, the theory did not work. It is essential to understand the trickle-down effect as well. The following section will help you learn about the same.

The Trickle-Down Effect 

You need to look into the aspects that were supposed to improve as per the trickle-down theory. It is not possible to maintain a balance in the economy if some conditions are not met. In trickle-down economics, the effect was not felt by the lower and middle classes of people. It is also essential to understand how paying taxes helps to maintain the economic balance. The government needs to maintain a fund for various needs. A country will not cope with emergencies, natural disasters, and medical emergencies if there are no funds. The tax paid by people adds up to this, and the government has the necessary resources to fight such calamities.

Now, if you look at the different sections of the society and their income, you will see that the maximum amount of tax is paid by the rich and the big business organizations. Cutting off their taxes will affect the government funds in a big way. Also, it is not justified to ask the middle and the lower class people to pay more taxes. It will not help in maintaining a balance.

The International Monetary Fund has also rejected this theory. They stated that increasing the income of the poor and the middle class will help in the growth. Cutting down taxes on the rich will not be beneficial. The theory does not have any relevance due to the following factors.

• Tax cutting for the wealthy does not necessarily mean that there will be an increase in employment rates, consumer spending, and government revenues in the long run.
• Extending the tax-cutting benefits to the poor and the middle class will be rather beneficial.
• The extra income accumulated by the slashed taxes for the wealthy will only increase income inequality in the United States.

The three reasons above make it clear that the effect of trickle-down theory is not as expected. Presently, the United States President is considering revoking the former president's Tax Cuts and Jobs Act.

Trickle-down Effect in Economics

Why is it Necessary in Education?

The above discussion will help you learn the theory and its consequences. You need to have a clear understanding if you are an economics student. Also, students from any management courses must understand the theory to analyze situations better and understand the effects of different economic theories. You can consult an expert from MyAssignmenthelp.com if you need some extra study help. The understanding of any topic is necessary to learn a subject properly. There will be many theories that affect the economy and have already been implemented. It is essential to know each. The trickle-down theory is one of the most important ones in economics. You must learn about it and the history surrounding this theory. Connect with an expert from MyAssignmenthelp.com to understand the topic well.