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  1. #1

    Cutting taxes on the rich

    I'm curious is cutting taxes on the rich actually creates jobs. I understand the theory of it, but does it work in practice? Obviously no taxes would be ideal, but short of that, is this how you create jobs?
    Quote Originally Posted by jllundqu View Post
    god damn vipers, all of them.



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  3. #2
    The question itself is not specific enough. What kind of taxes are you cutting? What is "rich"? What is the starting and ending tax rate?

    Too many variables to test this hypothesis in the real world even if you have the specifics.
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  4. #3
    Let's take the Bush tax cuts, as an example.
    Quote Originally Posted by jllundqu View Post
    god damn vipers, all of them.

  5. #4
    Quote Originally Posted by ShaneEnochs View Post
    Let's take the Bush tax cuts, as an example.
    You may get to see that quickly, when the "newest" recession starts when it stops .

  6. #5
    Any , Any , tax cut creates the possibilty that some of that money, goes back into the economy, gets invested where it can be borrowed by the ordinary , to create with , or is used to expand a business that the ordinary may benefit from . Any , Any tax hike, does exactly , the opposite.

  7. #6
    Taxes are like leaches, a couple three, a few, may be painful & annoying,multiples, can suck the life from the host.

  8. #7
    At the very least I would imagine that a tax cut on the wealthy would give them more money to accumulate capital for further expansions. The jobs might not be there immediately, but they will be in 5, 10 years, or so.
    Rand Paul 2016

  9. #8
    Rich people do not keep their money in their mattresses. They have it invested in the economy. In other businesses. In their own businesses.
    If you rob their wealth to feed the government, that's more money taken out of the economy. Fewer jobs.

    People invest where they think they can get the most return. It sends proper signals to the market. Government screws up the signals and wealth is misallocated.

    I've been trying to break this down in the simplest form possible.
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire



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  11. #9
    Quote Originally Posted by CaptUSA View Post
    Rich people do not keep their money in their mattresses. They have it invested in the economy. In other businesses. In their own businesses.
    If you rob their wealth to feed the government, that's more money taken out of the economy. Fewer jobs.

    People invest where they think they can get the most return. It sends proper signals to the market. Government screws up the signals and wealth is misallocated.

    I've been trying to break this down in the simplest form possible.
    Excellent point. Well said.

  12. #10
    Its interesting that rich people will work to find ways to have their money untaxed when the rates are high, but when the are lower, it might be in their best financial interest to just pay them. In this sense, and its certainly not talked about as much as the other, lower tax rates actually create more tax revenue for the government on an individual basis too.

    If you are interested in "Trickle Down" theory, please read this Sowell essay. Its about a 20 minute read and well worth it (imo).

    No such theory has been found in even the most voluminous and learned histories of economic theories, including J.A. Schumpeter's monumental 1,260-page History of Economic Analysis. Yet this non-existent theory has become the object of denunciations from the pages of the New York Times and the Washington Post to the political arena. It has been attacked by Professor Paul Krugman of Princeton and Professor Peter Corning of Stanford, among others, and similar attacks have been repeated as far away as India. It is a classic example of arguing against a caricature instead of confronting the argument actually made."
    http://www.scribd.com/doc/105544135/...-Thomas-Sowell

  13. #11
    Quote Originally Posted by CaptUSA View Post
    Rich people do not keep their money in their mattresses. They have it invested in the economy. In other businesses. In their own businesses.
    If you rob their wealth to feed the government, that's more money taken out of the economy. Fewer jobs.

    People invest where they think they can get the most return. It sends proper signals to the market. Government screws up the signals and wealth is misallocated.

    I've been trying to break this down in the simplest form possible.
    OK, I grant you they don't keep ALL THEIR money in mattresses. But the opposite is true too, they don't invest ALL their money in job creation. If it were the case that the rich always or mostly always invests in job creation and economy stimulation, than trickle down theory would be true, and bailing out the rich would always be the right thing to do.

    Some do, some don't, it's got a lot to do with opportunities available, and their personal goals, little to do with how much money they have. Rich people may have lots of ABILITY to invest and help the economy, but not always the DESIRE TO. People don't want to tax the rich because they like stealing, they only do so because they believe the rich are not spending it the right way. If the rich (any rich) were either throwing money around to charity or creating more jobs than we need, they'd be loved, not hated, and encouraged, not asked to be taxed.

  14. #12
    nm
    Last edited by ronpaulfollower999; 11-03-2012 at 03:35 PM. Reason: I misread a post...
    Rand Paul 2016

  15. #13
    Quote Originally Posted by Tpoints View Post
    OK, I grant you they don't keep ALL THEIR money in mattresses. But the opposite is true too, they don't invest ALL their money in job creation. If it were the case that the rich always or mostly always invests in job creation and economy stimulation, than trickle down theory would be true, and bailing out the rich would always be the right thing to do.
    Learn facts - http://www.scribd.com/doc/105544135/...-Thomas-Sowell
    Higher taxes causes rich people to invest their money in tax-free avenues like government bonds or simply hide it or send it overseas while lowering taxes encourages them to look to exploit good business opportunities where they can make good profit.

    Secondly, bailing out anybody is WRONG, be it poor or rich. Forced wealth-transfers are wrong, period.

    Quote Originally Posted by Tpoints View Post
    Some do, some don't, it's got a lot to do with opportunities available, and their personal goals, little to do with how much money they have. Rich people may have lots of ABILITY to invest and help the economy, but not always the DESIRE TO. People don't want to tax the rich because they like stealing, they only do so because they believe the rich are not spending it the right way. If the rich (any rich) were either throwing money around to charity or creating more jobs than we need, they'd be loved, not hated, and encouraged, not asked to be taxed.
    And why is it that rich are obligated to spend & invest THEIR money the way some socialist idiots think they should? Should somebody be able to steal YOUR money & spend it the "right way" on your behalf? Socialist-thievery is unjustifiable no matter the pretext.

    Besides, if businesses weren't so damned overtaxed & overregulated by socialist-thieves then the rich might be willing to invest more, if socialist thieves weren't so greedy then may be rich wouldn't take their money overseas!
    And many of the rich have been helping create jobs forever but do socialist-thieves ever appreciate it? Nope, they just ungratefully keep bitching & always want to steal more & more from others!
    There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
    - Milton Friedman

  16. #14
    " Besides, if businesses weren't so damned overtaxed & overregulated ".

    i do agree that businesses are over regulated ( way too much ) , as far as the taxes business pays -- i had a small business ( bonded , lic, insured ) , i knew pretty much what my taxes were going to be , i added my costs ( including taxes ) to the price when i submitted my bid , so who was paying the taxes .

    if people think about it , the consumer of the product/service pays the taxes , it is always tacked onto the price , anyone that thinks exxon--shell--wallymart--mcdonalds pays taxes is wrong , they are just the middle man passing the taxes the customer paid to the goverments , one other thing , if the business loses money they don't even send the goverment the money the customer paid for the product/service.


    i am wondering one thing , when you say you want to pay lower wages what levels are you thinking , 30/hr to 20/hr or 8/hr to 5/hr , not to debate the idea , just wondering.
    Last edited by ILUVRP; 11-06-2012 at 09:35 AM.

  17. #15
    Quote Originally Posted by ILUVRP View Post
    " Besides, if businesses weren't so damned overtaxed & overregulated ".

    i do agree that businesses are over regulated ( way too much ) , as far as the taxes business pays -- i had a small business ( bonded , lic, insured ) , i knew pretty much what my taxes were going to be , i added my costs ( including taxes ) to the price when i submitted my bid , so who was paying the taxes .

    if people think about it , the consumer of the product/service pays the taxes , it is always tacked onto the price , anyone that thinks exxon--shell--wallymart--mcdonalds pays taxes is wrong , they are just the middle man passing the taxes the customer paid to the goverments ,
    Yes, it's true that "corporate tax" really is consumer tax, which is another reason why it shouldn't exist but here's economics 101, higher prices reduce consumption & the less people buy, generally the less profits businesses make, that's why they look for ways to reduce the price, either by moving to less taxed & less regulated places as well as places where price of labor is lower.

    Quote Originally Posted by ILUVRP View Post
    one other thing , if the business loses money they don't even send the goverment the money the customer paid for the product/service.
    Why should they pay government anything if they weren't even able to recoup their investment? Why should anybody pay government anything? Because they are a mafia that would take away your freedom or even kill you if you don't pay extortion to them????

    Quote Originally Posted by ILUVRP View Post
    i am wondering one thing , when you say you want to pay lower wages what levels are you thinking , 30/hr to 20/hr or 8/hr to 5/hr , not to debate the idea , just wondering.
    Different labor/skillset will naturally get different wages/salaries, obviously, every buyer (businesses in this case) will try to pay as little as they can while every seller (workers in this case) will try to ask for as high a price for their product as they can, nonetheless, the point is that if there's a surplus of something & people are not buying it then prices will have to be lowered to the level people are willing to buy at. So if there's a surplus of labor then labor-prices need to go down but the problem being that minimum wage laws & welfare creates a price-floor whereby the labor in the economy isn't optimally utilized to increase total production.
    There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
    - Milton Friedman

  18. #16
    Quote Originally Posted by Paul Or Nothing II View Post
    Learn facts - http://www.scribd.com/doc/105544135/...-Thomas-Sowell
    Higher taxes causes rich people to invest their money in tax-free avenues like government bonds or simply hide it or send it overseas while lowering taxes encourages them to look to exploit good business opportunities where they can make good profit.

    Secondly, bailing out anybody is WRONG, be it poor or rich. Forced wealth-transfers are wrong, period.

    And why is it that rich are obligated to spend & invest THEIR money the way some socialist idiots think they should? Should somebody be able to steal YOUR money & spend it the "right way" on your behalf? Socialist-thievery is unjustifiable no matter the pretext.

    Besides, if businesses weren't so damned overtaxed & overregulated by socialist-thieves then the rich might be willing to invest more, if socialist thieves weren't so greedy then may be rich wouldn't take their money overseas!
    And many of the rich have been helping create jobs forever but do socialist-thieves ever appreciate it? Nope, they just ungratefully keep bitching & always want to steal more & more from others!
    Higher taxes or lower taxes only change how people invest IF ALL THINGS WERE EQUAL. If opportunities existed at the time of high taxes, and not when there are no taxes, opportunities would be the greater factor of where money goes.

    Does Sowell say trickle down theory is correct or not?

    Why is bailing out the rich wrong if you are sure they will help the economy? Or are you admitting they can't always, and/or helping the economy is not a good thing to do?

    The rich are not obligated to do anything. Should somebody be able to do anything? Thanks for asking my opinion as if it matters.

    Yes, they MIGHT, and they MIGHT NOT. Whether they will invest and whether the investment is going to be successful are two uncertainties, whereas taxing them is a guarantee. Oh, before you type up an angry response I didn't say I like or advocate taxing, I am just pointing out the facts.



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  20. #17
    Quote Originally Posted by Tpoints View Post
    Higher taxes or lower taxes only change how people invest IF ALL THINGS WERE EQUAL. If opportunities existed at the time of high taxes, and not when there are no taxes, opportunities would be the greater factor of where money goes.

    Does Sowell say trickle down theory is correct or not?
    Opportunities of varying degrees always exist, so the less scared the investing community is of being robbed, the more of the existing opportunities will be utilized. Opportunities are also created. During the early half of the U.S. history total taxes (federal + state + local) were only about 5% of GDP & it turned a bunch of British colonies into a very prosperous country while the living standards of people rose rapidly & opportunities & jobs were aplenty & that's why you'd people from various parts of the world coming to the U.S., not for any "free stuff" but for the opportunities & prosperity it helped create for everyone.

    Quote Originally Posted by Tpoints View Post
    Why is bailing out the rich wrong if you are sure they will help the economy? Or are you admitting they can't always, and/or helping the economy is not a good thing to do?
    If a business fails then it's because they aren't good enough to run it, so why steal money from somebody else to keep them afloat? Instead, let them go out of business & let other capable people buy & take those economic resources like land, labor & capital to produce goods & services more efficiently. Profit is usually the market-indicator of success.

    What you're saying is like, ok, if students getting goods grades is a good thing, then why not just give As to everybody?

    Quote Originally Posted by Tpoints View Post
    Yes, they MIGHT, and they MIGHT NOT. Whether they will invest and whether the investment is going to be successful are two uncertainties, whereas taxing them is a guarantee. Oh, before you type up an angry response I didn't say I like or advocate taxing, I am just pointing out the facts.
    Of course, life is full of uncertainties nonetheless, just saving money helps, money not spent is money not used to drive up prices of things, they'll at least put them in banks, it's the banks that then do the investing on their behalf & lends out to businesses, those businesses that succeed shouldn't be bothered while those who fail are automatically taken out of the market (unless government bails them out )

    And again, there's no "guarantee" with respect to taxes, you should really read that link, it's a known phenomenon that higher the taxes, the more rich people will invest in tax-exempt securities or hide their wealth or capital will leave to other countries.
    There is enormous inertia — a tyranny of the status quo — in private and especially governmental arrangements. Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable
    - Milton Friedman

  21. #18
    Quote Originally Posted by CaptUSA View Post
    Rich people do not keep their money in their mattresses. They have it invested in the economy. In other businesses. In their own businesses.
    If you rob their wealth to feed the government, that's more money taken out of the economy. Fewer jobs.

    People invest where they think they can get the most return. It sends proper signals to the market. Government screws up the signals and wealth is misallocated.

    I've been trying to break this down in the simplest form possible.
    Great point. This explains why billionaires' net worth is always fluctuating every year.

  22. #19
    Quote Originally Posted by ShaneEnochs View Post
    I'm curious is cutting taxes on the rich actually creates jobs. I understand the theory of it, but does it work in practice? Obviously no taxes would be ideal, but short of that, is this how you create jobs?
    Would you rather smart rich people decide where to put money, or a bunch of stupid polititians who end up making problems worse?

  23. #20
    When I was in business, taxes were a huge concern for what I did with my money. They were a cost of doing business, and something that was always considered when I would purchase a business, hire employees, make investments, etc. I had a very simply strategy with business - if I put money into the market, I wanted to get more out than I put in. Pretty basic. So if I had more money to invest, because of lower tax rates, I would spend that money which in turn would generate more money for me. It was a snowball effect.

    Additionally, my prices were set by market conditions of course, but taxes went into that price as well. If the taxes went up, my costs went up and then so did my prices. If the market conditions would get to a point where I could no longer make the level of profit that I wanted to make off of a particular business, I would shut it down.

  24. #21
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    The Bush tax cuts affect a lot more than just the rich.

    http://www.paywizard.org/main/salary.../bush-tax-cuts

    Tax Brackets - The 10% tax bracket will expire, reverting to 15%, which would apply to all incomes below $34,550. The 25% rate would rise to 28%, the 28% rate to 31%, 33% to 36% and the 35% bracket would go up to 39.6%.

  25. #22
    we can look at the bush tax cuts and look at the way things are now . they don't work , i am a strong beliver in the mult/velocity effect of money as it moves through the economy , give more money to the avg/poor american and they will spend it all , give the rich ( i think over 1 million $$ income ) more money and they will spend very little of it , they will buy more stock/bonds ( or put it in swiss/clayman islands banks ).

    the rich have about everything they need where as the avg american has enough trouble buying-- food--clothes--paying property taxes--electric bills , as warren buffet said one time give him more money and he would buy nothing , give his secertary more money and she would spend it all.

    everyone hates taxes as washington will always spend it all , my thoughts on taxes are simple , everyone pays no fed income tax on the 1st $40,000 then pays 20% on everything over 40k , no deductions on anything . no one could bitch as everyone gets gets the same 40k w/o tax.

    no one ( getting a pay check ) would have to fill out a tax form as the 20% would be taken out automatic after the 40k is reached .

    we would see the economy grow like crazy.

  26. #23
    Quote Originally Posted by ILUVRP View Post
    we can look at the bush tax cuts and look at the way things are now . they don't work , i am a strong beliver in the mult/velocity effect of money as it moves through the economy , give more money to the avg/poor american and they will spend it all , give the rich ( i think over 1 million $$ income ) more money and they will spend very little of it , they will buy more stock/bonds ( or put it in swiss/clayman islands banks ).

    the rich have about everything they need where as the avg american has enough trouble buying-- food--clothes--paying property taxes--electric bills , as warren buffet said one time give him more money and he would buy nothing , give his secertary more money and she would spend it all.

    everyone hates taxes as washington will always spend it all , my thoughts on taxes are simple , everyone pays no fed income tax on the 1st $40,000 then pays 20% on everything over 40k , no deductions on anything . no one could bitch as everyone gets gets the same 40k w/o tax.

    no one ( getting a pay check ) would have to fill out a tax form as the 20% would be taken out automatic after the 40k is reached .

    we would see the economy grow like crazy.
    Lots of points in here.
    First, you can't look at the Bush tax cuts in a vaccuum. A lot of other things happened too. They were as successful as they could be given the circumstances. They did work, but not enough to stave off the rest of the idiocy.
    Second, if the rich invest in stocks, that's money other businesses are using to create jobs. That's a good thing.
    Third, we can look at the incentives to invest overseas or store money in off-shore accounts. This is a real issue. We need to make investing here more attractive, higher rates on investments won't help that cause one bit!
    Finally, I like your 20/40 plan. At least to start. Of course, it would starve government which I would love! I agree the economy would grow. Maybe then we could get to a 10/40 plan... Then a 10/80 plan... Then finally a 0/100 plan!
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  27. #24
    Tax policy is just a small part of the job environment. Of course in a healthy, productive economy cutting taxes on business owners would allow them more money to put into expansion and they would hire more people.

    In this current economy, profits do not come from customers. They come from government subsidies and contracts. In this economy if you aren't getting money from the government you are struggling. That means you can give them all of the money they want, there is no incentive to expand. Their customers are the government, and that is expanding rapidly enough for them.

    If you slash tax rates and cut off the corporate welfare, and then addressed monetary policy, you could again have real economic growth and companies hiring. That won't happen now though. They will have to change the way they calculate the unemployment rate again to get the number back to where it used to be.



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  29. #25
    i don't think the wealthy are investing overseas , i think they are sheltering a part of their wealth ( which i would also do in case tshtf here if i were rich ).

    as far as the rich investing in stocks , they are trying to get the max return they can and i see nothing wrong with that , i would add that the stock market is very close to a all time high and the idea of job creation is not working , i do have a problem with people making money by trading paper and paying 15% tax on it , where as someone digging a ditch pays over 20% fed tax.

    one thing everyone should remember is that business pays no tax , the taxes are built into the price of the product/service. the people buying the product or service are the real tax payers , business is just the middle man .

  30. #26
    Quote Originally Posted by ILUVRP View Post
    i don't think the wealthy are investing overseas , i think they are sheltering a part of their wealth ( which i would also do in case tshtf here if i were rich ).
    How would you define sheltering?

    Personally, I don't have any money overseas, never did either. Everything I have right now is in real estate, cash, silver & gold, TIPS, bonds, and then some more "exotic" investments (art & classic cars). Of course, being in retirement I want my money (at least the majority of it) to be as liquid as possible in the event of a major health issue. Prior to retirement I had a lot more of my money tied up into the businesses that I owned.

  31. #27
    Quote Originally Posted by ILUVRP View Post
    i don't think the wealthy are investing overseas , i think they are sheltering a part of their wealth ( which i would also do in case tshtf here if i were rich ).

    as far as the rich investing in stocks , they are trying to get the max return they can and i see nothing wrong with that , i would add that the stock market is very close to a all time high and the idea of job creation is not working , i do have a problem with people making money by trading paper and paying 15% tax on it , where as someone digging a ditch pays over 20% fed tax.

    one thing everyone should remember is that business pays no tax , the taxes are built into the price of the product/service. the people buying the product or service are the real tax payers , business is just the middle man .
    The implication here is that paying taxes is the goal of economic growth. It isn't. The goal of economic growth is for the people to have more wealth. Taxes should be at the lowest level possible, consistent with the protection of persons and property.
    The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.

    "Who would be free, themselves must strike the blow." - Byron

    "Who overcomes by force, hath overcome but half his foe." - Milton

  32. #28
    Quote Originally Posted by Acala View Post
    The implication here is that paying taxes is the goal of economic growth. It isn't. The goal of economic growth is for the people to have more wealth. Taxes should be at the lowest level possible, consistent with the protection of persons and property.

    can't disagree with that like i stated above on my 1st post , the thing is everyone knows we will always be taxed , we must make the best of it and everyone has to share the burden equally , there should not be a set of rules for different levels of incomes and business , like i said anyone that thinks exxon/shell/wallymart/mcdonalds pays taxes are not looking at the real world, there are times thru their special write offs they don't even give our tax money to the feds , they keep it as profit.

  33. #29
    Quote Originally Posted by ILUVRP View Post
    can't disagree with that like i stated above on my 1st post , the thing is everyone knows we will always be taxed , we must make the best of it and everyone has to share the burden equally , there should not be a set of rules for different levels of incomes and business , like i said anyone that thinks exxon/shell/wallymart/mcdonalds pays taxes are not looking at the real world, there are times thru their special write offs they don't even give our tax money to the feds , they keep it as profit.
    Job number one is to reduce government to its proper, extremely limited, role. Then, and only then, we can look to see if any tax beyond a small, uniform tariff is needed and, if so, talk about how to apply it. Trying to adjust taxes for fairness when 99% of government revenue is being misspent is just a means of distracting and factionalizing the public. Your argument is motivated by envy.

    I am no fan of the government-created corporate business form, but that is not within the scope of this thread.
    The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.

    "Who would be free, themselves must strike the blow." - Byron

    "Who overcomes by force, hath overcome but half his foe." - Milton

  34. #30
    If the goal is jobs, we need to look at what will encourage an employer to add more people. First, let's give a tax cut to wealthy people. What will they likely do with it? They probably have pretty much all the stuff they need so will probably save or invest it. That means more money available to be lent out. If you are a business, will you hire more people becasue there is more money available to borrow? Unless you already want or need to borrow, that will not enter your calculation to decide to hire or not hire more people.

    What is more important? Demand for what you are producing. If you are having no problems making as many goods as you can currently sell, you won't be adding more workers. Unless you think you can sell more goods than you currently do. More money going into saving and investments is not going to change the demand for your goods and services (unless you are selling financial services).

    Now lets give the same dollar worth of tax cuts to lower income people. They have more pent up demand and are more likely to go out and spend most of that money instead of saving it. This DOES increase the demand for goods and services. As companies see demand for what they produce rising, they will eventually hire more people (after first trying to get more out of current workers). This is creating more jobs.

    Thus, if the goal is using tax cuts to increase jobs, give the money to those at lower incomes will be more effective than giving the same dollar value of tax cuts to the wealthy. In the case of the Bush tax cuts, most of the benefits went to those at higher income levels so it was not very effective as an economic stimulus and ended up adding to the budget deficit (since they were not offset by comparable reductions in spending which instead was increased to fight two wars).

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