Since when did tax cuts on the wealthy create jobs and spur investment?

[All Along The Watchtower]

Seriously, I want to know. Supply-siders point to Ronald Reagan's tax policies proudly as "proof" of the "tax cuts on the wealthy create jobs and spur investment" hypothesis. Yet what they fail to realize is that Reagan raised taxes many times (mainly on the poor and middle class) and cut domestic discretionary spending to help offset the huge deficits that resulted from his supply-side tax cuts and his enormous increased in defense spending. Even so, the deficit still exploded under Reagan, because of net spending increases and because tax revenues declined across the board-for the super-rich, because of tax cuts, and for the poor and lower middle class, because rising interest rates from the Volcker Shock sent the economy into recession.

Furthermore, corporate restructuring, combined with the increase in favorable tax legislation and the deregulation of the financial sector, as well as the removal of many trade barriers, made the financial sector incredibly powerful at the expense of the manufacturing sector. And the rise of multi-national corporations associated with neo-liberal economic policies (which Reagan accelerated), combined with the smashing of unions, meant that American capital was more powerful than ever, at the expense of American labor. This has lead to exploding income inequality, wealth inequality, and a decline in the standard of living for the majority of Americans since the 1970s, all for the subsidization of the wealthiest Americans.

The huge federal budget deficits and growth in the debt that supply-side economic policies have created have created have contributed to the decline of productive investment in the US economy, an increase in speculation in the financial and real estate sectors. The other big growth areas has been government spending, which has soared as a percentage of GDP. But most of that spending has come in the form of military spending, corporate subsidies, and growth in entitlements as more and more people are added to Medicaid, unemployment, and other programs as a result of the increase in poverty and decline of living standards for many Americans, and Medicare costs have skyrocketed as well, in no small part thanks to Medicare Part D. (Social Security is actually a lot more solvent than some people would have you believe).

So, exploding federal budget deficits, a decline in productive investment, increases in poverty, wealth inequality, and income inequality, declines of the standard of living for many Americans, increases in financial speculation that is dangerous to the global economy...

Yeah, supply-side economics has been a dismal failure, an extremely short-sighted policy that has enriched the few, at the expense of the many, and ultimately, threatens the livelihood of all in the long run.

[True Federalist (진정한 연방 주의자)]

Try the tax cuts Kennedy put in place.  Of course, when he cut taxes, the top rate was 91%.

[Torie]

Try the tax cuts Kennedy put in place.  Of course, when he cut taxes, the top rate was 91%.

Which next to nobody paid then except Frank Sinatra.

[○∙◄☻¥tπ[╪AV┼cVê└]

Try the tax cuts Kennedy put in place.  Of course, when he cut taxes, the top rate was 91%.

Which next to nobody paid then except Frank Sinatra.

Well, they kicked in at $400,000, so a fair number of people must have paid that.
In 1988, the top bracket started at $30,000, which is ridiculous.
http://ntu.org/tax-basics/history-of-federal-individual-1.html

[Gustaf]

I'm not sure what you're keeping equal here.

[opebo]

Creation of jobs and application of investment are State policies.  The 'tax cuts' method of realizing this policy is simply one method among many, and not, of course, the 'best' (but neither is it universally useless - in fact there isn't necessarily one 'best' way, but a mix is appropriate).

What has discredited this policy is the absurd claims made by transparently self-serving rich and rich-apologists.

[Wonkish1]

So Pompous is it your position that whatever marginal tax rates are set at they have no effect on the economy?

[Gustaf]

Creation of jobs and application of investment is are State policies.  The 'tax cuts' method of realizing this policy is simply one method among many, and not, of course, the 'best' (but neither is it universally useless - in fact there isn't necessarily one 'best' way, but a mix is appropriate).

What has discredited this policy is the absurd claims made by transparently self-serving rich and rich-apologists.

Surely you jest?

[krazen1211]

"But most of that spending has come in the form of military spending, corporate subsidies, and growth in entitlements as more and more people are added to Medicaid, unemployment, and other programs as a result of the increase in poverty and decline of living standards for many Americans, and Medicare costs have skyrocketed as well, in no small part thanks to Medicare Part D."

Amazing how this sentence is buried in a large paragraph of junk.

Medicare Part D, as silly as it is, is actually a lot cheaper than things like Medicaid.

[Wonkish1]

So Pompous is it your position that whatever marginal tax rates are set at they have no effect on the economy?

Pompous ^^^^

[opebo]

Surely you jest?

No, as you know I am a moderate (hence the Keynesianism when the Pol-potism would be so much more satisfying).

But my primary point was that we need to get past the idea that job creation and investment are 'private' affairs.   

[Link]

Since when did tax cuts on the wealthy create jobs and spur investment?

I think you are missing the Dems' point.  Cutting taxes on the wealthy will in many instances create jobs and spur investment.  The question is is it worth it.  For example the investment may be in an Italian shipyard and the jobs may be 4 more craftsmen to build yachts.  Obviously that is job growth and investment but I don't think it is really worth it.

What has been argued is that giving tax cuts or credits to poor and middle class people will result in a more efficient stimulatory effect.

Try the tax cuts Kennedy put in place.  Of course, when he cut taxes, the top rate was 91%.

Pompous Aristocrat, you also must take into account where on the curve you are playing.  My gut tells me any tax rate of 50% or higher isn't a good thing to do.  I don't have the math and research to back me up but I'm sure there are plenty of forum members that would be happy to provide a more factual analysis to support my position.

The other point Dems and smart Pubbies make is tax cuts do not pay for themselves.



I would view targeted (ie poor and middle class) tax cuts as short term Keynsian tools.  Borrow the money on the Federal level at absurdly low interest rates and give it to the poor and middle class (the people most like to spend it) during a recession or weak recover.  When the economy recovers remove the tax cuts/credits (raise taxes on the poor and middle class) and start paying back the money borrowed.

[Wonkish1]

Since when did tax cuts on the wealthy create jobs and spur investment?

I think you are missing the Dems' point.  Cutting taxes on the wealthy will in many instances create jobs and spur investment.  The question is is it worth it.  For example the investment may be in an Italian shipyard and the jobs may be 4 more craftsmen to build yachts.  Obviously that is job growth and investment but I don't think it is really worth it.

What has been argued is that giving tax cuts or credits to poor and middle class people will result in a more efficient stimulatory effect.

Try the tax cuts Kennedy put in place.  Of course, when he cut taxes, the top rate was 91%.

Pompous Aristocrat, you also must take into account where on the curve you are playing.  My gut tells me any tax rate of 50% or higher isn't a good thing to do.  I don't have the math and research to back me up but I'm sure there are plenty of forum members that would be happy to provide a more factual analysis to support my position.

The other point Dems and smart Pubbies make is tax cuts do not pay for themselves.



I would view targeted (ie poor and middle class) tax cuts as short term Keynsian tools.  Borrow the money on the Federal level at absurdly low interest rates and give it to the poor and middle class (the people most like to spend it) during a recession or weak recover.  When the economy recovers remove the tax cuts/credits (raise taxes on the poor and middle class) and start paying back the money borrowed.

More respect for another good post! May not fully agree, but you're posting in a much better format.

[memphis]

Try the tax cuts Kennedy put in place.  Of course, when he cut taxes, the top rate was 91%.

Which next to nobody paid then except Frank Sinatra.

Well, they kicked in at $400,000, so a fair number of people must have paid that.
In 1988, the top bracket started at $30,000, which is ridiculous.
http://ntu.org/tax-basics/history-of-federal-individual-1.html

Holy crap! My parents likely had the same marginal rate as Michael Jackson. That's f'ing nuts! No wonder the GOP worships the man so obsessively.

[All Along The Watchtower]

So Pompous is it your position that whatever marginal tax rates are set at they have no effect on the economy?

Well, like Link says, there is a point of diminishing returns with regards to revenue, but 35% highest marginal tax rate is well within the limits of how high you can tax the wealthiest taxpayers.

[Wonkish1]

So Pompous is it your position that whatever marginal tax rates are set at they have no effect on the economy?

Well, like Link says, there is a point of diminishing returns with regards to revenue, but 35% highest marginal tax rate is well within the limits of how high you can tax the wealthiest taxpayers.

So your basically admitting that your initial post wasn't exactly correct which is okay. I think after Link's post and your answer here it sounds like now you would probably adapt your initial post a little, right? That isn't a bad thing either; next time you'll probably be a little more of a formidable challenge to someone like me after taking what Link said into account and adapting your argument a little more. One of the valuable things about a place like this is that it gives us chances to improve on the arguments we make.