50 years of tax cuts for the rich failed to trickle down, economics study says

"Voodoo economics" --- Herbert Walker Bush ( speaking on 'Reaganomics' )

Need I say anything more?

This is why America needs to curb Republican's power. We kinda did that, already, but, we need to nuke the filibuster, all McConnell wants to do is block everything that democrats want to do, stuff that America needs, stuff that is popular with Americans, or, most Americans, it's time Democrats heed the call of the people.

Nuke that sucker and damn the torpedoes!

But, of course, Republicans aren't going to like the message.

Sorry, but it's the truth.

https://www.cbsnews.com/news/tax-cuts-rich-50-years-no-trickle-down

Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will "trickle down" and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group — the rich.

The new paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes.

Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn't, the study found.
But the analysis discovered one major change: The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates.

"Based on our research, we would argue that the economic rationale for keeping taxes on the rich low is weak," Julian Limberg, a co-author of the study and a lecturer in public policy at King's College London, said in an email to CBS MoneyWatch. "In fact, if we look back into history, the period with the highest taxes on the rich — the postwar period — was also a period with high economic growth and low unemployment."

 

Just by reading this quote, I can already point out a flaw in their study: If they didn't find a correlation between tax cuts and per capita growth, it's because they didn't look for one. They literally just said "There were tax cuts, but no capita growth and so...that means there's no growth." It's not that simple. What sectors of the economy were strong in a given year? What was hiring well, and what wasn't hiring?

The other problem I have economically with their thesis is the idea that it's a "bad thing" that they kept more of their earnings. I regret to inform them that it's a function, not a bug. I dare them to correlate government taxes with the same capita growth. And actually go into depth. Because a government's coffers do NOT correlate to the people's earnings, at all and they know that as well.

Let me be really blunt, simplistic and harsh about the postwar period: It was NOT the high taxes that led to the high economic growth. Wanna know what it was? Buildings were destroyed, damn near all over the world(and likewise, the US was revved up to war production in a 6 year period, it didn't have much expense for resources anywhere else.) That left a big damn hole, and it was a hole that Americans could fill in the post war period.

Also, because the economy was contracted in the war period(Great Depression 1929-1954) that it had no CHOICE but to go up. Some of these economic facts are very basic, others are conclusions that were ignored or simply not taken into account by people like in the study who assert that simple taxation alone made an economy recovery. There are other reasons that increased the economic output, but those reasons are more controversial.

Let's just say that demand drives economic activity, and there's no greater demand then needing a 4-wheeler because you got a tyke on the way. The baby boomers generated wealth not from the political world they created, or from an era of good jobs from the 70's-to-the-90's. The baby boomers had the most benefit to the world, coming out of the mother's womb.

As an economist, I understand the era of 1929-1954 perfectly. I also understand taxation as a matter of policy is obsolete. We could of course have 60% taxes all over again. But I'd ask these gentleman what to make of France 2009? It led to Sarosky's defeat, how can that be if it was the true financial victor of policy?

That's because as I illustrate, taxation did not play a huge role in economic output, nor in the "consolidation" of wealth. After all, it doesn't mean new money is generated. It only means less money was taken out of their pockets.

Wealth is consolidated, simply because there aren't enough wealth generators. 90% of people are working for 10% of people. There's your consolidation. And that consolidation will continue, regardless of taxation. Also, taxes do not make CEO's give workers pay wage increases.

I can go on and on about the failed premise that they came to in their study.

 

https://www.cbsnews.com/news/income...more-than-50-years-census-report-today-shows/

This problem existed BEFORE the Pandemic and MUST be addressed by the Biden Administration.

Any and all attempts by uber-wealthy Moscow Mitch to stymie tax increases on the top 1% must be RIDICULED and EXPOSED as self serving GREED by Elite Republicans.

 

Yes curb Republican power, that will reduce wealth inequality. Never mind that it has grown unabated ever since Nixon. Carter, Clinton and Obama all did nothing about it but Dirty Joe will do something about it. Silly people like me notice that there seems to be a 1:1 correlation to wealth inequality and America opening its doors to the 3rd world. It is not an illusion that America peaked right before that event.

 

Or as Ross Perot said: The sucking vacuum of jobs. Now they expect us to believe they care, and the solution is massive government taxation, and mind you the top 1% already pay the majority in taxes so it will inevitably hit the middle class anyway. It did in the Obama era, and it will in the Biden Administration.

 

Trickle down has never worked, it;s a myth.

 

Unfortunately, the "voodoo" in economics is not reserved to the Reagan era, as lamentable as that was. The fact is, economies work when and because the people making them work believe in them. It is literally faith, just like religious faith. Now, that is not to diminish the power of faith. Humans make reality out of what they believe, so nothing is more powerful. We simply need to realize that any economic approach, capitalism or other, with function well enough if enough people believe and act in good faith.
It is interesting to observe that expert economists can explain in painful detail all the reasons for past crises, but cannot reliable tell what the effect of varying taxes by 2%, for example, will do.
Hayek famously said, "If Socialists understood economics, they wouldn't be Socialists". We could respond by observing that if economists understood economics, they would be psychologists.

 

GHWB allowed Democrats to bully him into a minimum wage increase that threw the economy into a recession and cost him a second term. He knew better as he vetoed the first attempt to crush the economy. He knew better because he watched Carter's minimum wage increases put skids on the recovery engineered by Reagan 10 years earlier. GHWB has no credibility.

 

So the post-WW2 economic growth had nothing to do with fighting the war on the soil of economic competitors so that in your high tax era we had no competition on the world stage ,,, Europe was rubble, the UK was rubble, Japan was radioactive rubble.

You need new material.

 

the rights answer to this will be.... more tax cuts for the rich

 

For me, growth isn't the thing, wages are, and they have stagnated while those at the top have gained considerably.

 

Nick Hanauer, and investment banker, a plutocrat, a 1%er, disabuses his fellow plutocrats of that particular myth

 

Well, what is the definition of "income" for the rich? If they are making income that's taxed then they aren't really the top of the income ladder. When I think "rich" I think about the investor class who use their funds to finance loans and such that leads to economic growth.

 

Oh it worked, it did just what the GOP and the right wing wanted it to do, funnel all the money to the top and lower the wages and bennys of the working man to the point where they now feel indebted to their employers for their jobs.
It worked, it worked very well.

 

Just an observation here but Carter was BEFORE Saint Ronny and the recovery Saint Ronnie 'engineered' was the very same that FDR did 50 years before him, spend a truck ton of money. Carter raised the minimum wage but not enough. He was behind the 8 ball from day one due to Nixons failed policies to control run away inflation, he did manage to do it by and large but Carters policies didn't kick in until Saint Ronnie took over and of course took credit. Bush failed the economy because he failed to check Saint Ronnies wild spending resulting in a crash coupled with deregulation of the trucking and savings and loan business. Bush, like Carter was screwed from day one.
History can be your friend or your worst enemy.

 

Everyone should pay their fair share. They should pay exactly the same amount. Rich or poor. Just like when you go to a movie or get your car fixed. Everyone pays the same.

 

Do you plan to bring him here to debate? If not, why post his narrative here?

 

I believe Kansas implemented trickle down economics and is widely regarded as a failed experiment. They had nine budget cuts in 3 years and had their state credit rating downgraded. Kansas had a $700 million budget deficit in the first year the tax cuts were implemented while being forced to close schools and borrow from infrastructure spending.

 

History is my friend. Cuomo used the GSEs to load up the mortgage market with people who could barely afford the mortgage payments at teaser rates. Pelosi and Reid along a few years later and did what Democrats always do ,,, raise the minimum wage, booting those people out of their jobs and mortgages. The only time in decades that a Federal minimum wage increase didn't cause a recession was during the dot-com bubble.

Let's put this aside until Biden doubles the minimum wage. I'm betting on a recession.

 

OK, so I watched the video. The example he used was Seattle which is, as I posted, an exception because even in 1996-1997, the only time a minimum wage increase didn't result in a recession, there was a tech bubble. So, he said that the mean wage in WA was $9 with Seattle being $15. It basically means no magic wage for WA outside of Seattle.
What about the rest of the country? We no longer have company towns per se, so his Ford analogy doesn't wash.
We have a small number of people with a rediculous amount of money. Bezos for one has made a killing putting brick & mortar out of business. Losing money for a while so he could emerge with no competition. When Trump held his feet to the fire in postal rates that cost tax payers money, Bezos unleashed the WaPo against him. Amazon may need to be broken up. Zuckerberg may need to be in jail for buying the thugs who kept poll watchers from watching the polls.

I still don't believe that one shoe fits every place across the country and the evidence is repeatable.

 

Wow, how does a person reply to wild tangents like that? Raising the minimum wage never creates a recession, republicans create recessions.
And, just so you know, the economy is in the tank because of the loser trump, so lets be careful about how 'blame' gets tossed around.

 

Kansas was and remain not just a failure but an EPIC failure of the right wings dream.
It failed so badly Kansas had to enact the largest tax hike in the nations history and it still didn't fix the problem!
Kansas is what will happen to the US if thinking people do not keep the republicans out of power.

 

Increasing the amount of money in taxes on the rich will not necessarily correlate with more money going into the federal coffers. The rich can move their money around; and when they cannot, they can pass the extra expense onto the rest of us. Back in the 1990's, when the Washington Post was a little more rational, they had a story about the luxury tax. Under the luxury tax, if you purchased a yacht for $2,995,000, you would have to fork over an extra $289,500 in taxes. (1) So instead of purchasing yachts in America, they purchased them elsewhere or purchased used ones that did not fall under the tax code. As a result, US boatbuilding industries were economically devastated, some even went out of business. So this rehashed, tired, immoral idea of increasing the taxes on the rich does not work, not to mention the immorality of telling someone they have to fork over more in taxes because they earn more money, especially considering that the richest 1% already pay about 25% of the federal taxes as it is. (2) This idea of taxing the rich is so one-dimensional, sophomoric, and puerile, not mention, again, completely immoral.

1. https://www.washingtonpost.com/arch...he-rich/08ea5310-4a4b-4674-ab88-fad8c42cf55b/
2. https://americansfortaxfairness.org/tax-fairness-briefing-booklet/fact-sheet-taxing-wealthy-americans/#:~:text=to the wealthy.-,The richest 1% pay an effective federal income tax rate,someone making $50,000 to $100,000.

 

If the people on the lower rung of the economic ladder do not have disposable income, they buy fewer things, it's that simple,
Demand drops and jobs fall. If they don't have enough to live on, then they go on public assistance, and the value of that assistance is de facto welfare for the companies that should have been paying them enough to live in the first place.

People have to make enough to live, or society gives them enough to live.

one way or the other, it's going to cost society and paying the administrative costs of the agencies that do the assisting, costs society even more.

the simplest solution is to pay them enough to live and the modesty increased prices of goods overall will be lower than the taxes required to administer the social program.

Pay them enough to live plus a modest amount of disposable income, then demand increases and companies hire more.

Giving tax breaks to rich people does NOT result in job growth. Taxing the super rich and paying people at the bottom more DOES result in job growth because it places the burden where the burden can afforded and doesn't burden those who cannot afford it and it increases disposable income on that sector which is the engine of job growth, the lower to middle class.

Reaganomics was 'supply - side' economics. It's myth because tax breaks to the super rich do not increase supply, because supply only increases when demand increases. So, the way to increase demand is to give those who create the most demand in the economy, the lower to middle class. When demand increase, supply increase will follow. They don't need tax breaks, a business will find the money to invest to meet that demand, so they will sell stock or they will get loans by investment bankers or sell bonds. So 'demand side' economics, the opposite of 'trickle down' (supply side or 'reaganomics' ) is the way to go. Tax breaks for the middle class, that is a good thing, but not tax cuts for the super rich. Repubs always say 'tax cuts for everyone', it's an error in logic. Taxes have to be paid, the government has to be funded. Tax cuts for the superrich increases deficits, which ultimately results inflation, which penalizes the middle and the poor because they are less able to hedge, and the increase costs of goods diminishes the purchasing power of their disposable income

 

First thing that needs to happen is to raise the capital gains tax back up to 35% with no loop holes. That will cause the Mitt Romnys to reinvest and stop taking profits. Once that happens the stock prices will level out and the 'bottom line' will be come less important.
That and raise minimum wage and increase benefits and the economy will grow like weeds!