Trump tax plan is more of
the same, failed “trickle-down economics
To
watch this video on YouTube: https://www.youtube.com/watch?v=cABuFmA3nhY
Trump
and conservatives in Congress are planning a big tax cut for millionaires and
billionaires. To justify it they’re using the oldest song in their playbook,
claiming tax cuts on the rich will trickle down to working families in the form
of stronger economic growth.
Baloney.
Trickle-down economics is a cruel joke. Just look at the evidence:
1. Clinton’s tax increase on the rich hardly stalled the economy. In 1993, Bill Clinton raised taxes on top earners from 31 percent to 39.6 percent. Conservatives predicted economic disaster. Instead, the economy created 23 million jobs and the economy grew for 8 straight years in what was then the longest expansion in history. The federal budget went into surplus.
2. George W. Bush’s big
tax cuts for the rich didn’t grow the economy. In 2001and 2003,
George W. Bush lowered the top tax rate to 35 percent while also cutting top
rates on capital gains and dividends. Conservative supply-siders predicted an
economic boom. Instead, the economy barely grew at all, and then in 2008 it
collapsed. Meanwhile, the federal deficit ballooned.
3. Obama’s tax hike on
the rich didn’t slow the economy. At the end of 2012, President
Obama struck a deal to restore the 39.6 percent top tax rate and raise tax
rates on capital gains and dividends. Once again, supply-side conservatives
predicted doom. Instead, the economy grew steadily, and the expansion is still
continuing.
4. The Reagan recovery
of the early 1980s wasn’t driven by Reagan’s tax cut. Conservative
supply-siders point to Ronald Reagan’s 1981 tax cuts. But the so-called Reagan
recovery of the early 1980s was driven by low interest rates and big increase
in government spending.
5. Kansas cut taxes on
the rich and is a basket case. California raised them and is thriving. In
2012, Kansas slashed taxes on top earners and business owners, while California
raised taxes on top earners to the highest state rate in the nation. Since
then, California has had among the strongest economic growth of any state,
while Kansas has fallen behind most other states.
So
don’t fall for supply-side, trickle-down nonsense. Lower taxes on the rich
don’t generate growth and jobs. They only make the rich even richer, at a time
of raging inequality, and they cause bigger budget deficits.
[*Our
thanks to Alexandra Thornton and Seth Hanlon from the Center for American
Progress]
ROBERT
B. REICH is Chancellor's Professor of Public Policy at the University of
California at Berkeley and Senior Fellow at the Blum Center for Developing
Economies. He served as Secretary of Labor in the Clinton administration, for
which Time Magazine named him one of the ten most effective cabinet secretaries
of the twentieth century. He has written fourteen books, including the best
sellers "Aftershock", "The Work of Nations," and "Beyond
Outrage," and, his most recent, "Saving Capitalism." He is also
a founding editor of the American Prospect magazine, chairman of Common Cause,
a member of the American Academy of Arts and Sciences, and co-creator of the
award-winning documentary, INEQUALITY FOR ALL.
