Posted on 11/17/2017 6:51:20 PM PST by lasereye
In the 1980s, the Democrats reviled President Reagan’s tax cuts as “trickle-down economics”–a phrase they themselves had invented many years before. But the Reagan tax cuts produced the greatest boom in America’s modern history. The results were so sensational that Reagan carried 49 states when he ran for re-election in 1984.
That shut the Democrats up for a while, but bad ideas never go away forever. The Democrats are now trying to revive their “trickle-down economics” smear. In today’s White House press briefing, an unidentified reporter asked Dr. Kevin Hassett, Chairman of the Council of Economic Advisers, about the tax bills now pending in Congress:
What makes you think trickle-down economics is going to work this time when it hasn’t worked before?
Dr. Hassett answered the question more politely than I would have:
So trickle-down economics is something that, I guess, people who criticize the idea that taxes affect the economy will use to characterize approaches like the one that we’re pursuing. But I don’t think the idea that’s celebrated by even the non-partisan staff of the OECD — that if you have lower marginal rates, you get economic growth — is voodoo economics or controversial at all.
And yeah, the fact is that countries around the world have cut their corporate rates and had broad-based reforms, like we’re doing on the individual side, and then seeing economic growth result.
I don’t think there’s anybody who thinks that you’ll get no growth or negative growth for this. Maybe there are a few people. But in every economic model I’ve seen, you get growth — either a lot of growth, or sometimes if it’s a closed economy model, a little growth. But you get positive growth out of this. And that growth will benefit workers, and let’s talk about that.
So, right now, the way a U.S. firm avoids U.S. tax is they locate activity, say, in a country like Ireland instead of here. And so if you build a plant in Ireland, then you can sell the stuff back into the U.S. And when you sell the stuff back into the U.S., then it increases the trade deficit and doesn’t do anything for American workers, but it does increase the demand for Irish workers and drive up their wages.
And so what the President wants to do is cut the rate to 20 percent and build guardrails around the tax code so that people can’t transfer price — everything to Ireland anymore. And if we do that, then the people who benefit will be the workers here in the U.S. who have increased demand for their jobs.
That’s economics for dummies. But there are a lot of dummies in the White House press corps and the Associated Press. Thus, the AP followed up on the question from today’s briefing in an unusually ill-informed article by Paul Wiseman headlined: “Derided by critics, trickle-down economics gets another try.”
Coincidence? I think not. The White House transcript doesn’t tell us who asked the “trickle down” question. Was it one of Wiseman’s AP colleagues? I don’t know, but Wiseman’s Twitter feed tells us that he is a Democratic Party activist. One way or another, the Democrats have decided to try to revive their “trickle down” smear. Let’s take a brief look at Wiseman’s piece.
Does money roll downhill?
In their drive to cut taxes, President Donald Trump and congressional Republicans are betting it does.
Behind their legislation is a theory long popular among conservatives: Slash taxes for corporations and rich people, who will then hire, invest and profit — and cause money to trickle into the pockets of ordinary Americans.
It is certainly true that cutting marginal tax rates for corporations and individuals will increase investment and employment. But no significant Republican describes this as “trickling down,” a phrase invented, as Wiseman later admits, by Democrat Will Rogers.
The nonpartisan Tax Policy Center has found that the House tax plan would deliver an average tax cut of $360 for middle-income taxpayers in 2027. A far more generous bounty would go to the highest-earning 1 percent: An average tax cut of $62,000. For the top 0.1 percent, the gain would average $321,000.
This level of stupidity is enough to make you cry. Obviously, you can’t cut taxes that people aren’t paying. Currently, our tax code is so biased against upper-income taxpayers that they pay the overwhelming majority of income taxes. No developed country collects as much as we do, proportionately, from upper income taxpayers. If you cut income taxes, you will indeed benefit those who are paying them. Democrats somehow consider this to be scandalous.
It is entertaining to see the Associated Press/Democratic Party citing utterly uninformed and long-discredited sources from decades ago in their desperate attempt to stop tax reform:
Over the years, the concept — also known as supply-side economics — has frequently drawn ridicule.
“Voodoo economics” was the derisive term George H.W. Bush applied to it in his failed 1980 bid for the Republican presidential nomination against Ronald Reagan, a supply-side enthusiast.
This is painfully stupid. George Bush lost the 1980 nomination, obviously, and he was proved wrong by the subsequent success of Reagan’s economic policies. George Bush became an advocate for those policies, and he carried 40 states in 1988 when voters expected him to continue them.
The liberal economist John Kenneth Galbraith in 1982 likened the trickle-down idea to horse manure: “If you feed the horse enough oats, some will pass through to the road for the sparrows.”
John Galbraith was a flat-earth economist whose views have been proved wrong on just about every subject. It is remarkable to see the Democrats try to resurrect him in 2017!
In the view of Carl Davis, research director at the left-leaning Institute on Taxation and Economic Policy, the track record for supply-side economics “is not particularly inspiring.”
Where does the AP go for comment on the economic record of a president who won re-election by carrying 49 states? Of course, to a “left-leaning” organization, which no doubt is funded by a handful of rich liberals who stand to gain from leftist government policies.
How inspiring, to use Davis’s word, is the Reagan economic record? In 1983, US gross domestic product grew by 11.4%, and the following year by 9.3%. In 1985, by 7.4%. These days, the Democrats tell us that the 2% economic growth achieved by Barack Obama’s left-wing economic policies is the best we can do, even though Obama had the advantage of taking office just after a stock market crash and ensuing recession.
The Associated Press goes on and on, trying to discredit the Republicans’ tax reform proposals. But the facts are inescapable. The Democrats’ claim that the Obama administration’s 2% growth rate is the best we can do is ridiculous. Already since President Trump took office, the economy is growing at at 3% rate in anticipation of pro-growth policies coming out of Congress.
What will happen if pro-growth policies are actually enacted and signed into law? The sky is the limit. That is why White House press correspondents and Democratic Party news outlets like the Associated Press are desperately trying to block Republican tax proposals from being enacted into law.
You are making a non sequitor as this is a tax cut in aggregate and roughly 80% will see a tax cut and those that do get a tax cut are 2x as large as the people who see an increase. Even a lot of people using that website calculators that THINk they are getting a tax increase are wrong as most don’t ask you for your 401k contribution, standard IRA contribution, medical deductions (insurance plus fsa, hsa) and a number of other things like nqdc plans.
Writing a Comment at another post, I checked out taxes in 1961 and for all years from 1913 to 2017. I don’t have the computer expertise to transfer the useful graph to this thread. Perhaps someone else could do that? In 1961 the top earner tax rate was 91%. Kennedy wasn’t talking about a cut to 39%, but something in the 70s. As to the Reagan years, from 1980 to 1982 top tax dropped from 70% to 50% where it stayed until 1986 after which it dropped down to 28% in in 1988. By 1993 (Gulf War costs) they were up to 39.6% where they stayed until 2000. In 2003 35% became the new normal (no Bush2 increases to cover the Iraq/Afghanistan war) where they stayed until 2012, long after “Ozero” was elected. So NO massive tax increases by him. Corporations fled to cheap labor countries because the massive increases in upper management salaries during and after the Reagan years meant CEOs had to find cheap labor to cover those obscene salaries before the stockholders started screaming bloody murder.
Top taxes for 1918 to 1921 averaged in the mid 70s (paying for WW1).
From 1936 to 1939 were 79% (ending the depression).
From 1941 to 1963 ranged from 81.1% to 92%,
a total of 23 years (included WW2 and Korean War).
From 1964 to 1980 averaged in the lower 70s (Vietnam War).
From 1987 to present rates bounced around from 28% to 39.6% (and Bush2 left paying for his wars to the future generations). On the other hand Bush1 realized that 28% wasn’t cutting it, raised taxes slightly and lost votes.
http://www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates
You all are absolutely right, this is a giveaway to the big corporations. We can get rid of the health mandate, but how will emergency room costs be recouped, from us? Social Security is likely to take a hit. If you think it is unfair to tax local and state taxes twice, how about SS? In 1983 Rs and Ds agreed to tax SS on 50% of income over $25,000 for singles and $32,000 for couples. This was based on income we had already earned and paid taxes on. Then Clinton increased the rate to 85% for income over the $25k and $32k deductions. Inflation has doubled in those years, but have they increased those deductions according to inflation. He## no, we moderate income retired people are supporting the big earners and corporations on money we were already taxed. These exemptions should now be in the $50ks and $70ks. as a widow for a decade I can’t even afford to marry the nice man I am now with. As two singles we have $50,000 exemption total on our single tax forms, but if we got married we could only deduct $32,000. [$50,000 - $32,000 = $18,000 x 25% = $4,500, which is more than the increase in the Personal Deduction will give the 2 of us.] Thanks for pushing us into living in sin you sneaky tax law promoters. In fact if the uniparty would just stick to the agreement they made in 1983 that FICA be deducted from the 90% level of all earnings in a given year we would not be worrying about SS disappearing in a few years. The geniuses who devised this compromise arranged that the “tax max” would increase according to inflation. But guess what happened, wages of higher level earners were jumping 10% to 20% after 1983, so the total earning being deducted from are down around 82% instead of the agreed 90%. Once more the richest win while we eat dirt. This is the same scam that happened with the Alternative Minimum Tax—failure to use a true index figure or figures.
This is also happening in big cities. There is concern that the high housing cost states like CA, NY, and NJ will vote against this tax plan. In one medium city which is politically controlled by big developers the property tax has increased by at least 10% each year except if you are living in the house. This has driven rentals sky high, so police, firemen, teachers, hospital/restaurant/hotel workers have to live way out in the suburbs, and God help them and us when there is a major storm and they can’t get home or in to work. These taxes should increase according to inflation, and only be adjusted much higher when a property is sold or big renovations are made.
Does anyone know what is happening to the Schedule E or to the Schedule C for small business people?
If McCain does vote for this tax bill it could be his way of destroying the Trump wing of the Rep. party which has been less than kind to him to go to the grave with him.
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The tax shift/shaft (the middle class) bill reinforces every notion that the GOP only cares about big business.
It will hand the Executive and Legislative branches to the Donks for at least two generations.
IF the Republic survives.
I don’t know what happened to your taxes. All I know is that MY taxes soared under Ozero. Same is true for everyone I know. All that extra money was spent on the failed stimulus plan, Obamacare (which I never benefitted from) and giveaways like Obama phones and putting millions more people on food stamps (mostly in the big cities).
He was over cooked......................
The headline personal marginal rate of 60 years ago is irrelevant as virtually no one paid it. There is a reason they had to add the AMT in 1969 and that’s because millionaires were paying no taxes with all the tax deductions you could take then but not now. THe top 1% effective tax rate hasn’t changed much from 1950 to 2009, until Obama raised the top rate AND added the ACA sur-tax.
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