system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: The logic behind raising taxes for the poor and cutting them for the rich?

Thanks for the answers! It makes a lot more sense now.
gpt
The logic, albeit flawed, is that the "poor" (who generally work for the "rich") don't pay their fair share (to an extent this is true), and that reducing taxes on the rich encourages them to invest it into things that create jobs for the poor. The idea is that by making the rich richer, wealth will "trickle down" to the poor. Hence the phrase "trickle down economics."


This has been shown to not actually work in real life. The only reason the rich are rich is because the poor (the vast majority of the population, and therefore the vast majority of customers) have money to spend on things that the rich make and sell. 


Further, when you consider that the poor SPEND most of their income, and the rich either hoard or invest it, it makes sense to use higher taxes to lift the tax burden off the poor so the economy can keep running. 

It also makes sense to use taxes to encourage the rich to invest their money into companies that build things and employ people instead of investing it into things that turn money into more money for no real work (buying real estate, stocks, bonds), or worse, hoarding it in trust funds and offshore bank accounts (often to avoid paying taxes on it).


Yes, the richest people often pay more in taxes than the poor make in a year. BUT, when you consider that the rich are only rich because of the infrastructure that our tax dollars built it's only fair that they pay a larger share. 

If there was no public education system, you wouldn't have any skilled workers to make your money with. If there were no roads you wouldn't be able to ship your goods far enough to become as rich as you are. 

In the end, the rich will end up paying a smaller portion (if not a smaller amount) of their income in taxes because of tax loopholes (ie, because the capital gains tax is a lower percentage than income tax, and much of their income is from investments) and because they spend less of their income, meaning less of their income goes to sales taxes and excise taxes. 

This is why Monaco, despite having an 18% tax rate, is considered a tax haven. The poor end up paying a vastly higher effective tax rate (assuming they spend 60% of their income, they would be paying 10.8% in taxes) than the rich (who, assuming they spend 10% of the income, would be paying 1.8% in tax).

I use the terms poor and rich very loosely, of course.