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human
ELI5: How does trickle-down economics NOT work?

Alright, I'm trying to understand the other side of the trickle-down economics question. Basically, I hear people always saying that when rich people get tax cuts to promote the economy via trickled-down economics, they don't "spend their money on job growth" and therefore it doesn't work. But how does it *not* work?

I'm not trying to be combative, I'm not saying I support trickle down economics style policy, but I don't understand economically how it won't work. I'll use an example.

Bob CEO gets a tax cut, so his income goes up. What can Bob CEO do with the money? If he buys a house, that promotes the real estate industry, someone needs to build/maintain the mansion, likely a business which employs a lot of people. So if a rich person buys a bigger house it's better for the construction industry.

Same thing if Bob CEO buys a yacht, a car, or a suit. The boat-building business and port makes money from those, and there are many people that make boats or maintain docks. If he buys a luxury car, then that helps the auto industry. I get if he might buy foreign goods and then the money goes somewhere else, but that happens with people at all economic levels. (Ferraris and Hondas are both foreign.)

Or if he buys the suit, he helps the tailor's business. And if he decides to invest the money or give it to a bank, then the bank or he will use the money to give to another business for that business to use to expand and likely pay/hire more workers since it's expanding due to the cash influx.

The *only* way I understand the business owner would not benefit the economy trickle-down style is if he stuffs it under a mattress, which is a stupid thing to do since you just lose money to inflation, so nobody does that.

Where does the money go if it doesn't "trickle down"?

**Please read the paragraphs I wrote, a lot of these responses say people throw money into banks or investments but I covered what I thought about it here**
gpt
It's a common misconception that the rich create jobs.

Yes, we need people with capital to invest in production and the jobs that go along with that, and now and then you will get somebody like Henry Ford or Elon Musk who produces something that you didn't even know you wanted.  But generally, employers they will only create more jobs if there is sufficient demand for their products.

Most large employers will do everything they can to *not* hire more people.  They will demand higher productivity or cut wages to keep their expenses as low as they possibly can.  When they finally do take on extra staff at decent wages, they do so grudgingly.

And the only thing that forces their hand is if they think there are enough people out there with enough money to buy the extra products that would be made.  And the rich pretty much already buy everything they need or want.  If they have more money in their pockets, they don't spend it on more stuff - they put it in the bank (often in offshore tax havens) or buy stocks and shares in the hope of turning it into even more money - which they still don't use to buy more stuff.  And if they do buy stuff, it's often foreign anyway.  Generally, the richer you are the greater the proportion of your spending goes on imports.

So cutting taxes for the rich doesn't really do anything for job creation.  It mostly just gives the rich more *wealth*.  If you instead cut taxes for the poor, they rush out and buy more stuff.  This forces employers to employ more people, who can themselves buy more stuff.  This also reduces the number of poor and unemployed people overall.

And this also acts as a 'trickle up', because the employers are making more profits.  The ordinary man and woman on the street are the real drivers of the economy.  Give them the means to spend more, and it benefits everybody.