Posted on 10/03/2012 8:25:10 AM PDT by Kaslin
Dr. Thomas Sowell's "'Trickle Down Theory' and 'Tax Cuts for the Rich'" has just been published by the Hoover Institution. Having read this short paper, the conclusion you must reach is that the term "trickle down theory" is simply a tool of charlatans and political hustlers.
Sowell states that "no such theory has been found in even the most voluminous and learned histories of economic theories." That's from a scholar who has published extensively in the history of economic thought. Several years ago, Sowell, in his syndicated column, challenged anyone to name an economist from any economic school of thought who had actually advocated a "trickle down" theory. To date, no one has quoted any economist who ever advocated such a theory. Trickle down is a nonexistent theory. Those who use it simply argue against a caricature rather than confront an argument actually made.
President Barack Obama recently criticized Mitt Romney and Paul Ryan for trying to sell a tax plan, which he called "trickledown snake oil." Criticizing tax cuts as trickle down is a way not to confront the argument; however, there's empirical evidence about the effects of tax cuts. Sowell shows that during the Warren Harding administration, in 1921, Secretary of the Treasury Andrew Mellon advocated tax rate cuts, which were enacted into law by Congress. Afterward, there was rising output; unemployment plummeted; and the resulting higher income produced greater federal tax revenues, even though the tax rate had been lowered. There were somewhat similar results in later years after high tax rates were cut during the John F. Kennedy, Ronald Reagan and George W. Bush administrations.
The facts about the 1920s tax rate cuts are unmistakably clear for those who bother to check the facts. In 1921, when the tax rate on people earning more than $100,000 a year was 73 percent, the federal government collected a little more than $700 million in income taxes, of which 30 percent was paid by those earning more than $100,000. By 1929, after the tax rate had been cut to 24 percent on incomes higher than $100,000, the federal government collected more than $1 billion in income taxes, of which 65 percent was collected from those with incomes higher than $100,000.
In 1962, Democratic President John F. Kennedy pointed out that "it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now." Both Presidents Ronald Reagan and George W. Bush made similar arguments, and the tax rate cuts had the effect of stimulating economic growth while increasing federal tax revenue and shifting a greater percentage of the tax burden on to wealthier individuals.
One very insightful part of Sowell's paper is the discussion about what Mellon called the "gesture of taxing the rich" -- namely, tax-exempt securities that he tried unsuccessfully to put an end to. Tax-exempt securities and other tax breaks are valuable tools in the politics of class warfare and envy. Politicians have it both ways. They get votes by raising taxes on the wealthy -- or threatening to do so -- and at the same time provide the wealthy with a way out of high taxes through tax-exempt securities. This explains how President Obama can raise tens of millions of dollars in campaign contributions from Hollywood millionaires and Wall Street's rich and powerful. "Tax cuts for the rich" demagoguery is simply the height of deceit perpetrated on the gullible people and useful idiots.
You can bet that the White House has people reading every bit of the news, including this column and Dr. Sowell's article. You can bet some people in the news media will read it, as well. Despite the facts that Sowell has marshaled, they will continue to use trickle down theory and "tax cuts for the rich" demagoguery, even though they now have hard evidence to the contrary, because they can count on widespread gullibility and inability to do critical thinking.
Ping
Either Sowell or Williams would have been a superb first black president.
They sure would have
Sowell hated his minor brushes with the political world. While supremely intellectually qualified to be President, he never would have wanted the job and certainly would not have wanted a post limited by the modifier “first-black.”
His bio is a very enlightening read. At the time of its publication, he was not registered with either party.
Thanks for posting and the ping, Kas!
Thanks for the ping jaz.
You are welcome jaz, I thought you would like it.
While I agree with what Williams and Sowell have said here,
they’re still accepting the fools’ premise that the left seeks a prosperous economy with sufficient tax income to the government to perform its necessary functions.
These are OUR goals, not theirs.
Their goals are actually to induce ubiquitous poverty among the “commoners” whilst the “elites” enjoy the elite lifestyle that they “deserve” for being intellectual/elite.
That there are those who are prospering, and not “elite”, really gets under their skin, and they’ll use the power of coercion (government) whenever they can in order to punish them.
I don’t know if this started with Rousseau or with Satan, but the ideology has been around a long time.
I have to disagree with the good doctor. It is not really a theory, it is an observation.
Actual trickle down occurs when the government extracts revenues from citizens through taxes, fees, penalties, or whatever they choose to call it.
The revenue is then filtered down through a maze of bureaucracies. Whatever is not consumed by the government then trickles down to the benefit of the citizens.
Absolutely correct, MrB. When I get into a discussion about this with a liberal, the first thing I ask is "What is the purpose of taxes? To collect revenue or to make things 'fair?'" If it's about anything other than collecting revenue I stop the discussion and explain the purpose of taxes. If they don't understand that least little bit, we have nothing to talk about.
I get out of a lot of arguments that way. :^)
If they (or 0bama) say “make things fair”, what they really mean is “use the coercive force of government to ‘get’ those people that have more than me”.
They need to understand that this is a very dark thing in their heart that they need to examine. It doesn’t make them a “good person” to want to “make things fair” - it makes them a very evil, covetous person.
Oh yeah, and when I point that out about their heart, I am informed that it is I who is covetous for wanting to keep my stuff that I had to work to have! About the only thing one can do at that point is hand them a dictionary and tell them to look up “covetous.” Idiots.
Cool, so you’ve gone that route.
Yes, “covetousness” involves wanting what someone else has.
Now, being someone who attempts to understand the leftist point of view in order to not go crazy at their lack of logic...
If you believed that all wealth actually belonged to the collective instead of to the individual, then someone wanting to keep what they earned COULD BE viewed as “covetous”.
But, that’s another point to unearth with the leftist in question - in order to believe that keeping what you earn is “covetous”, you have to believe in the collective, not individual, ownership of all wealth. Then make them defend that.
The response I gave you to this article sounds a lot like Mitts response today about "trickle down government".
Sowell states that "no such theory has been found
I have to disagree with the good doctor. It is not really a theory, it is an observation.
Actual trickle down occurs when the government extracts revenues from citizens through taxes, fees, penalties, or whatever they choose to call it.
The revenue is then filtered down through a maze of bureaucracies. Whatever is not consumed by the government then trickles down to the benefit of the citizens.
Which is another way of saying that, for every dollar that actually gets used for its intended purpose, many many dollars are collected.
If people ate according to the “lots in, little out” diet, obesity would be even worse than Moochells claims. Not a good “optic” for the government, but accurate.
And that explains why we have an obese government.
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