Since at least the early 1940s.
Posted on 12/04/2012 8:25:22 AM PST by ksen
The Republican Party has long promoted itself as the party of business. Republicans understand the needs of business, we are told, and if the country would leave the economy in their hands business would boom. All we need to do is to give those at the very top of the income distribution – the “job creators” – more income through tax breaks, and then sit back and wait for the magic happen. Our investment in the wealthy will produce remarkable economic growth, and everyone will be better off.
The Bush tax cuts were a test of these claims about supply-side economic policies. To justify the tax cuts the nation was, in effect, given a business prospectus from the Republican Party. We were promised that cutting taxes on the wealthy would result in much higher economic growth and broadly shared prosperity. For those who wondered how we would pay for such a large cut to the government’s revenue stream, the Republican prospectus had a remarkable claim. The tax cuts wouldn’t cost us anything. Growth would be so strong that the tax cuts would more than pay for themselves. Even those who admitted that the tax cuts might not be fully self-financing still made strong claims about faster economic growth offsetting much of the lost revenue from the tax cuts.
The reality, of course, has been quite different. There is little evidence that the Bush tax cuts, or any other tax cuts directed at the so-called job creators, have had a noticeable effect on economic growth. And the promise of broadly shared prosperity has not been realized. Most of the gains from economic growth in recent decades have gone to the top of the income distribution while the inflation adjusted wages of the working class have been relatively flat. Furthermore, the tax cuts have not paid for themselves as promised, and it hasn’t even been close. The Bush tax cuts have already cost us trillions in revenue, and if they are extended for high income tax payers, they will cost us roughly another trillion over the next decade.
The failure of Republicans to deliver on their promise that tax cuts would be mostly self-financing is a large factor in the deterioration in our long-run fiscal outlook, and it is putting considerable pressure on programs such as Social Security. In fact, the Bush tax cuts can be thought of as a loan from the Social Security Trust Fund that was supposed to be paid back with the revenues from higher economic growth, a loan that is presently in default.
To see this, recall that the government began intentionally collecting a surplus from the Social Security program beginning in 1983 in order to prefund the retirement needs of baby boomers. The idea was to run a surplus for several decades while the baby-boomers were still working to get ready for the deficit years the system would experience after they retired.
The revenue from Social Security over and above what was needed to fund payouts reduced the overall government debt and allowed taxes to be lower than they could have been without these surplus funds. For example, the surplus that Bush inherited from the Clinton administration was largely due to the Social Security Trust Fund, and Bush argued it would be better to give this surplus to the private sector through tax cuts than to leave it in the hands of the government. But it wasn’t better. The income of the wealthy grew as they pocketed the tax cuts, but workers experienced stagnant wages, a recession that hit working class households particularly hard, and intense pressure to cut important social programs.
Despite their failed promises, the Republican Party is asking that we extend the tax cuts for the wealthy, and some are even calling for further reductions in tax rates. However, if the Republican Party is truly the party of business, then surely it will understand that no responsible financial institution would continue to invest in a business that failed meet, or even come close to the growth and revenue projections that justified the investment in the first place. The payoffs from tax cuts that were promised during the Bush years have not been realized, and the failed promises about growth and revenue have damaged the health, education, and retirement programs the working class depends upon in our increasingly globalized economy.
A true party of business would end our investment in the false promise of supply-side economics. However, a party with a goal of reducing the scale of programs such as Social Security and Medicare along with delivering tax cuts to wealthy political backers would use arguments about the economic effects of tax cuts to disguise its true intentions. Which description fits best? Many Republicans still claim that tax cuts for the wealthy enhance economic growth despite the evidence to the contrary, but it’s rare to hear a Republican admit that these supply-side policies have failed.
The Republican Party has long promoted itself as the party of business. Republicans understand the needs of business, we are told, and if the country would leave the economy in their hands business would boom. All we need to do is to give those at the very top of the income distribution – the “job creators” – more income through tax breaks, and then sit back and wait for the magic happen. Our investment in the wealthy will produce remarkable economic growth, and everyone will be better off.
The Bush tax cuts were a test of these claims about supply-side economic policies. To justify the tax cuts the nation was, in effect, given a business prospectus from the Republican Party. We were promised that cutting taxes on the wealthy would result in much higher economic growth and broadly shared prosperity. For those who wondered how we would pay for such a large cut to the government’s revenue stream, the Republican prospectus had a remarkable claim. The tax cuts wouldn’t cost us anything. Growth would be so strong that the tax cuts would more than pay for themselves. Even those who admitted that the tax cuts might not be fully self-financing still made strong claims about faster economic growth offsetting much of the lost revenue from the tax cuts.
The reality, of course, has been quite different. There is little evidence that the Bush tax cuts, or any other tax cuts directed at the so-called job creators, have had a noticeable effect on economic growth. And the promise of broadly shared prosperity has not been realized. Most of the gains from economic growth in recent decades have gone to the top of the income distribution while the inflation adjusted wages of the working class have been relatively flat. Furthermore, the tax cuts have not paid for themselves as promised, and it hasn’t even been close. The Bush tax cuts have already cost us trillions in revenue, and if they are extended for high income tax payers, they will cost us roughly another trillion over the next decade.
The failure of Republicans to deliver on their promise that tax cuts would be mostly self-financing is a large factor in the deterioration in our long-run fiscal outlook, and it is putting considerable pressure on programs such as Social Security. In fact, the Bush tax cuts can be thought of as a loan from the Social Security Trust Fund that was supposed to be paid back with the revenues from higher economic growth, a loan that is presently in default.
To see this, recall that the government began intentionally collecting a surplus from the Social Security program beginning in 1983 in order to prefund the retirement needs of baby boomers. The idea was to run a surplus for several decades while the baby-boomers were still working to get ready for the deficit years the system would experience after they retired.
The revenue from Social Security over and above what was needed to fund payouts reduced the overall government debt and allowed taxes to be lower than they could have been without these surplus funds. For example, the surplus that Bush inherited from the Clinton administration was largely due to the Social Security Trust Fund, and Bush argued it would be better to give this surplus to the private sector through tax cuts than to leave it in the hands of the government. But it wasn’t better. The income of the wealthy grew as they pocketed the tax cuts, but workers experienced stagnant wages, a recession that hit working class households particularly hard, and intense pressure to cut important social programs.
Despite their failed promises, the Republican Party is asking that we extend the tax cuts for the wealthy, and some are even calling for further reductions in tax rates. However, if the Republican Party is truly the party of business, then surely it will understand that no responsible financial institution would continue to invest in a business that failed meet, or even come close to the growth and revenue projections that justified the investment in the first place. The payoffs from tax cuts that were promised during the Bush years have not been realized, and the failed promises about growth and revenue have damaged the health, education, and retirement programs the working class depends upon in our increasingly globalized economy.
A true party of business would end our investment in the false promise of supply-side economics. However, a party with a goal of reducing the scale of programs such as Social Security and Medicare along with delivering tax cuts to wealthy political backers would use arguments about the economic effects of tax cuts to disguise its true intentions. Which description fits best? Many Republicans still claim that tax cuts for the wealthy enhance economic growth despite the evidence to the contrary, but it’s rare to hear a Republican admit that these supply-side policies have failed.
Since when have marginal rates been trending down?
Since at least the early 1940s.
Doesn’t look like they’re trending down at all. Looks to me like they’ve been level or ticking slightly up for the past 25 years.
"For the U.S. economy, the current top income marginal tax rate on earnings is about 42.5 percent, combining the top federal marginal income tax bracket of 35 percent with the Medicare tax and average state taxes on income and sales."
Not once does he make a convincing argument that the above-described paradigm is not the apex of Laffer. His later paralogisms about elasticity are plowed with doubt precisely because he knows capital flight is a given past 50.
The Pareto coefficient chart from 2005 is as much bunk as the global swarming hockey stick graph from 7 years earlier. I find it deeply ironic that morons like Diamond & Mann embrace 'science' but then want everyone to put their 'faith' in absurd, spurious projections.
Flight will proceed in an ellipitical hybrid of lower tax rates traded off against preferred SoL/climate/lifestyle. Singapore, Oz and Korea are the most likely winners, noting Facebook's financial founder Saverin to the former.
Any further questions, look at France. Not an economic or political regime I'd care to emulate...
You mean the Singapore, Australia, and South Korea that manage to have a more universal healthcare system than the US does and still remain a haven for rich people fleeing the United States?
I guess if you want to cherry pick the info than sure.
I recently first ran across one of KSEN's article posts and I thought I smelled the hint of Troll when I read it and his comment posts.
I still smell it on every one of his posted articles since then, including this one.
His method is to post his article, agree with the article's author that "them rich guys are ripping off us poor folks" (communism 101), for a few posts, then when caught, either fade out, or give a few "I sort of agree with you, all I meant was ...." type of responses, then fade out. Only to return later to try again by posting another lefty article.
He/she is relying on his signup date for cover, but in the early days of FR, many, many leftists were signed on, and the Forum allowed many leftists to spew their socialist/communist propaganda, as part of the "discussion".
Jim finally clearly, and rightfully, stated that FR was not a place for lefties to spew, and as many lefties as were found were spanked, and sent back to DU.
Others simply went into Mole Troll mode, popping up periodically like KSEN does.
Reading through this thread, it appears that more and more FReepers are recognizing KSEN's stripes, and I suspect that it won't be long before he gets the ZOT.
He sounds very much like a liberal troll. He seems to be most interested in pushing higher taxes, more regulation, and economic servitude.
Anyone who wants to claim that supply side economics has failed doesn’t understand that government interventionism is the poison of economics.
And government HAS intervened, horribly and with malice aforthought.
We currently have the most anti-business administration EVER.
And higher taxes DO NOT equal higher growth.
LOWER taxes DO equal higher growth.
That HAS been proven, repeatedly.
Anyone who says otherwise IS trolling.
Is that the “Jaws” them I am hearing in the background?
Yes, I’d like to hear ksen tell us with a straight face how taxes grow the economy by taking money OUT of it.
“Theme”
Man, my typos are becoming weapons grade.
Hahaha Col, like I’ve been hiding what I believe. Jim can ban me if he wants, it’s his site. It’s no skin off my nose.
I doubt he can keep up a dialogue on this without admitting he's a full blown lib. Most of his posts on this thread are simple declarations, very leftist in nature, very wrong, and unsupportable in every way unless you're a leftist.
((((Darksheare))))
I've been quite clear that higher tax rates doesn't mean higher growth. In fact I've said a number of times that there is no statistically significant link between GDP growth and marginal tax rates.
LOWER taxes DO equal higher growth.
The data disagrees with you.
What's to admit? I've clearly stated that I'm a liberal/progressive since I started posting here again.
I also use lots of colorful charts. ;)
Yes, I’d like to hear ksen tell us with a straight face how taxes grow the economy by taking money OUT of it.
I've never claimed that taxes grow the economy. I've claimed that higher marginal rates have not been shown to hurt the economy.
Personally I think what people want is a steady tax rate whatever the rate. Tax uncertainty probably causes a lot more damage than whatever the rate is set at.
Oh, but I have claimed that lower tax rates leads to concentrations of capital and wealth, which I believe the data also bears out.
Too bad. For you. Brain dead is no way to live your life. I suppose you think our economic problem is not taxing the rich enough rather than spending our children's and grandchildren's money on nonsense that does no good for anyone.......
:-)
You're going to end up loving having me around. Just watch. :D
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