"The economic consequences of major tax cuts for the rich" is a research study that came out a few years ago. But I missed it then and it's never too late to catch up. The authors set out to examine all instances of major tax reductions on the rich in 18 OECD countries between 1965 and 2015 and identify the results.
I don't want to keep you in suspense, so here's the impact of the tax cuts on economic growth:
There was no noticeable affect on growth. Or on unemployment. So what did the tax cuts accomplish?
Surprise! Lower taxes on the rich make the rich richer. And that's about it. Here it is in more detail:
We find that major tax cuts for the rich push up income inequality, as measured by the top 1% share of pre-tax national income. The size of the effect is substantial: on average, each major tax cut results in a rise of over 0.7 percentage points in top 1% share of pre-tax national income.
On the income inequality side, the results do not closely align with the theory that the rich have greater incentives to work and invest when their taxes are cut, given that we do not find any statistically significant effects on growth, unemployment or investment from cutting taxes on the rich. Given our measure of income inequality includes both realized capital gains and labor income, it is also unlikely the results are being driven by tax avoidance, because a significant part of avoidance takes the form of shifting income into capital (Piketty et al., 2014). Rather, our results are most consistent with Piketty et al.’s argument that lower taxes on top incomes induce the rich to bargain more aggressively to increase their own rewards, to the direct detriment of those lower down the income distribution.
There you have it. Tax cuts on the rich just make them even greedier and more predatory. And we've got another one coming thanks to Donald Trump's huge success with working class voters. As H.L. Mencken put it, "Democracy is the theory that the common people know what they want, and deserve to get it good and hard." America's common people are about to learn that lesson anew.
Unfortunately they are not likely to learn that lesson even if they get hit hard in the face with it,
What lesson? It's a feature, not a bug.
Nope. They never learn. That's what the rich will be laughing about all the way to the bank.
A sad conclusion to myriad such assessments is this:
"Gullible" and "stupid" are two very different attributes, and only incidentally related in some, but not nearly all, cases.
I would add indifference. As long as their taxes don't go up drastically people could care less about pretty much everything else.
Or possibly couldn't care less.
" ... Given our measure of income inequality includes both realized capital gains and labor income ..."
This appears to say they aren't counting unrealized capital gains. So if tax cuts induce the rich to realize more of their capital gains it will appear to increase their pre-tax income but this is partially an illusion. Similarly it is unclear what is being counted as labor income. Tax cuts may cause rich people to take more of their labor income in taxable forms (rather than as untaxed perks).
Except capital gains are taxed at a different rate and so would be unaffected in this analysis.
As for untaxed perks, why would they make that shift if they can continue to be untaxed? And I severely doubt this is a huge portion of their income, certainly not enough to drive these results.
I mean...this is interesting and everything....
WAIT A MINUTE, LOOK OVER THERE!! IMMIGRANTS!! CARAVANS!!
TRANSGENDER STORY TIME! FLEE FOR YOUR LIVES!!!!
Better check your kids when they return from school. They may have a different gender.
It'll get far worse before working class people finnaly realize the GOP is, has been, is currently and will continue to screw them over. It'll have to get far worse to snap people out of this trance they are in about Trump.
Tax cuts have always been about enriching the wealthiest Americans. How the myth of the job creators and trickle down economics still persists is beyond me. When the rich get a tax cut they spend it on stock buybacks and increased dividends. They rarely if ever invest it in more jobs. Investing in automation to get rid of jobs? Hell yes.
What Americans bought into when Reagan was elected was perpetuation of White Christian Supremacy. Before it became clear that Republicans supported racism, that is before about 1968, Reagan was regarded as a crank for his economics. Lower-income whites didn't suddenly buy into Voodoo Economics.
This is what still defines political alignments. The media have always avoided discussing the role of racism, hence the myth that it was Reagan's economics that made him President - and the myth that it was economics that won for Trump this time.
+1
I think economics makes for a good disguise. It gives people who refuse to see that they are racist an excuse to deny it. I think many people are in denial of their own various biases.
What about the domestic yacht building industry? Have you no concern for skilled craftspersons and yacht building American entrepreneurs??
I like this Mencken quote:
"As democracy is perfected, the office of the President represents, more and more closely, the inner soul of the people. On some great and glorious day, the plain folks of the land will reach their heart's desire at last, and the White House will be occupied by a downright fool and a complete narcissistic moron."
I believe that day is here. Not sure if you could find a better example than Donald J. Trump.
I hope he's the worst I see in my lifetime or anyone sees ever again.
There is no bottom. I fully expect to see confirmed pedophiles, murderers, nazis and other completely morally bankrupt people as GOP nominees in about 10-20 years, as long as they all are white Christian males. Republicans have discovered that elections are basically just coin flips now: eventually they’ll win no matter what the quality of the candidate, because the public can’t tell fact from fiction and believes whatever the internet/TV tells them . Whatever happened to that Navy Seal who openly murdered Muslims and was pardoned by Trump like 5+ years ago? Isn’t it time for him to be running for office?
I thought W. was the worst president possible. I was sure of it. The worst idiot with the worst record:
- The greatest national security failure in our history (9/11)
- The greatest foreign policy blunder in our history: (Iraq War)
- The greatest failure in natural disaster response: (Katrina)
- The greatest financial / economic collapse since the Depression
- A lot of other shit: lies about WMD, torture, terror state, etc.
His rehabilitation continues with the crowd cheering yesterday during his appearance at the coin toss before the Cowboys game.
On the bright side, by the time Trump gets to his post-presidency he'll be dead.
Shorter:
Tax cuts on the rich have very low -- or negative -- fiscal multipliers. That is to say that giving money back to the rich results in said money being pulled out of immediate, local circulation, and placed into investments that primarily serve to enrich the investor at the expense of the worker, especially if said investment is global.
Added:
If you want to maximize federal dollars, put it into higher amounts of SNAP, make SNAP less restrictive, and expand Medicaid availability. These dollars are spent locally, supporting local businesses resulting in stabilization of poor neighborhoods and their basic services.
A tax cut on the rich makes them richer. It also makes the super rich flock to politics to make themselves even richer.
All this is irrelevant anyway, as tax cuts, unless paired with corresponding spending cuts, mechanically increase GDP. Specifically GDP by definition increases to the extent any new deficit spending is funded by foreigners, which in practice is about half.
If it confuses you at the national level, think about your town, and what would happen if your mayor decided to borrow a ridiculous sum from global markets for a giant infrastructure projects. Of course your town’s economy would boom until the money ran out. Then it would be effed, unless that project was actually worth the price.