Economic History Shows Clearly That Tax Cuts for Rich Hurt the Economy

[dtotire]

Economic History Shows Clearly That Tax Cuts for Rich Hurt the Economy

Right-wing politicians and pundits carry on repeatedly about how wrong it would be to raise taxes on the rich in a time of economic downturn. Wrong.

Just because you repeat something over and over doesn't make it true. In fact, there is a body of empirical, historical evidence that proves clearly that tax cuts for the rich not only do nothing to spur economic growth -- they actually do substantial damage to the prospects for economic growth.

First let's look at the proposition that high taxes on the wealthy stifle economic growth. In the last century, marginal tax rates on the rich were their highest during World War II -- when the wealthy were called upon to help finance the war effort. During World War II, the tax bite on wealthy Americans was close to punitive (the highest bracket was 91 percent). But that didn't hurt the economy; far from it. By war's end, Americans were rolling in cash. The average weekly pay rose 83 percent between 1940 and 1945. Many families had their first discretionary income.

In fact, this period -- and the expansionary fiscal policy that helped finance the war -- led to the longest sustained period of growth in American history and created the American middle class.

Or we can turn to the tax policy of the Clinton administration. In 1993, President Bill Clinton proposed a budget that raised taxes on the rich. Republicans predicted that its passage would lead to economic doom. They argued that the Clinton tax increase on the rich would lead to economic stagnation and unemployment. Instead, of course, the Clinton administration created 22.5 million jobs, of which 20.7 million -- or 92 percent -- were in the private sector. His economic policy eliminated the federal deficit and left his successor -- George Bush -- with budget surpluses projected as far as the eye could see.

So history tells us pretty clearly that increased taxes for the rich don't hinder economic growth. Now let's look at historical evidence that the opposite proposition is true -- whether tax cuts for the rich actually promote economic growth.

To see the fallacy in that argument all you have to do is go back to the Bush administration. For eight years, George Bush and the Republicans lowered taxes for the wealthy and cut back the regulation of big corporations and Wall Street -- all based on the premise that these two policies would benefit the economy.

The results are there for everyone to see.

more:
http://www.huffingtonpost.com/robert-creamer/economic-history-shows-cl_b_786643.html

[Schema Thing]

1. kick

[bemildred]

2. Ya think?

People who grab too big a piece of the pie are parasites, they weaken the economic organism, and history is perfectly clear on that point. Banana Republics are not known for their military prowess or the longevity of their governments.

[raccoon]

3. K&R. nt

[DirkGently]

4. Great find. I'd like to hear the adminstration acknowledge these facts.

[fasttense]

5. Thanks for posting this.

It's common sense but few in this country have any of that left.

[rainy]

6. thanks for posting! nt