Cabal, Jessa Mae C.

BSBA-1E

Participation Activity 4 - Do tax cuts simulate the economy?

President Reagan's administration used Trickle-Down Economics when the US economy

struggled with a high employment rate; inflation peaked at an all-time high. Trickle-Down
Economics is the extra money from tax cuts for corporations and high-income earners that
would benefit everyone and ensure faster economic growth. Considerations of whether the
effect of tax cuts on government tax revenue and whether the money saved in taxes stimulates
the economy are necessary to determine whether this policy works for economic growth and
improving people's living conditions. The idea behind tax cuts is that people will be less likely to
work if taxes are excessively high, resulting in less tax revenue. Lower tax rates, on the other
hand, may result in the government collecting more tax revenue that can use to improve the
lives of its citizens since people will work harder if they can keep more of their earnings. Also,
when tax rates are lower, the tax cuts for the wealthy might be harmful since the money does
not flow down. According to one study, reducing taxes increased the wealth of the top 1% while
having a 99% effect on the economy. Tax cuts for the wealthy would have to be spent on local
businesses to have a real economic impact, but this is rarely the case. Additionally, existing
evidence is not enough to prove that the wealthiest people in society spend money on anything
other than taxes in a way that directly benefits the less fortunate.

I can apply trickle-down economics in a way that makes sense to me as a student. I gain
a lot of learnings about life and myself through experiences, especially in making wise
decisions. In the past, I made many impulsive decisions that I later regretted. This learning is
valuable to me, this represents me as a wealthy person (not in terms of money) who has the
advantage, and I intend to share it with others; so they do not have to go through what I
experienced as much as possible. I believe doing this will help them take advantage of
opportunities, create realistic short- and long-term goals, and use their resources properly.