Study: 50 years of tax cuts for the rich failed to trickle down

[Syt]

https://www.cbsnews.com/news/tax-cuts-rich-50-years-no-trickle-down/

50 years of tax cuts for the rich failed to trickle down, economics study says

Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will "trickle down" and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group — the rich.

The new paper, by David Hope of the London School of Economics and Julian Limberg of King's College London, examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn't, and then examined their economic outcomes.

Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn't, the study found.

But the analysis discovered one major change: The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates.

"Based on our research, we would argue that the economic rationale for keeping taxes on the rich low is weak," Julian Limberg, a co-author of the study and a lecturer in public policy at King's College London, said in an email to CBS MoneyWatch. "In fact, if we look back into history, the period with the highest taxes on the rich — the postwar period — was also a period with high economic growth and low unemployment."

Because the analysis ends in 2015, the research doesn't include President Donald Trump's massive tax overhaul, which he signed into law in late 2017 and which slashed taxes for the rich and corporations while providing a moderate cut for the middle class. But Limberg, who co-authored the study with David Hope, a visiting fellow at the London School of Economics' International Inequalities Institute, said that he wouldn't expect the results of that tax cut to be much different.

Already, Mr. Trump's tax cuts have lifted the fortunes of the ultra-rich, according to 2019 research from two prominent economists, Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley. For the first time in a century, the 400 richest American families paid lower taxes in 2018 than people in the middle class, the economists found.

The "careful" new research from the London School Economics "suggests indeed that tax increases on the wealthy should be considered post-COVID," Berkeley's Zucman said in an email to CBS MoneyWatch.

To be sure, the economy was humming along before the pandemic struck the nation in March, with an unemployment rate that was at its lowest in about half a century. Conservative think tanks such as the American Enterprise Institute pointed to Mr. Trump's tax cuts as an engine for stronger economic growth.

Yet even so, millions of American families struggled to find jobs that paid living wages, while the cost of essentials such as health care, housing and education increased at far faster rates than the typical income. Even before the pandemic, income inequality had reached its highest point in 50 years, according to Census data.

In 2020, the pandemic has worsened inequities across all spectrums, touching racial, gender and educational divides. When the economy shut down in March, workers who couldn't transition to remote work — typically lower-paid employees involved in retail, service and hospitality jobs — were hit the hardest.

At the same time, white-collar workers generally fared better as they were more likely to maintain their jobs as they shifted to remote work. Investors also benefited as the stock market rallied on hopes for an economic recovery — a development that doesn't help most low- and middle-class workers. Only about half the U.S. population is invested in the stock market through their retirement and savings accounts, and even then more than 80% of all stocks are owned by the richest 10%.

Since the pandemic began, the combined wealth of America's 651 billionaires has jumped by more than $1 trillion, reaching $4 trillion in early December, Americans for Tax Fairness said earlier this month.

Meanwhile, almost 8 million Americans have fallen into poverty since the start of the pandemic through November, according to new data released by the University of Chicago and the University of Notre Dame.

Rebuilding the economy and household wealth for low- and middle-class families are among the issues facing President-elect Joe Biden after he's inaugurated next month. Raising taxes on the rich and corporations could provide trillions of dollars in resources for helping the economic recovery, Zucman told CBS MoneyWatch.

"This is not only a viable option, but also a fair option, because some of the wealthiest taxpayers have benefited from the pandemic — for instance large corporations such as Amazon and their shareholders," he noted. "These taxpayers could reasonably be asked to pay more to make up for pandemic losses."

https://twitter.com/4TaxFairness/status/1336661136461029376?s=20

BREAKING: U.S. billionaires have grown their collective wealth by $1 trillion since mid-March. That's more than it would cost to send a $3,000 stimulus check to every person in America.

More of our latest research here: https://americansfortaxfairness.org/issue/net-worth-u-s-billionaires-soared-1-trillion-total-4-trillion-since-pandemic-began/

[The Larch]

In other cutting edge research, the pope is confirmed to be Catholic and bears are found to shit in the woods.

[Oexmelin]

[DGuller]

I hope someone brought this study to the attention of Republicans in Congress, so that they can adjust their policy preference in light of new information.

[Syt]

I hope someone brought this study to the attention of Republicans in Congress, so that they can adjust their policy preference in light of new information.

That's not what they're being paid for by their employers.

[grumbler]

I hope someone brought this study to the attention of Republicans in Congress, so that they can adjust their policy preference in light of new information.

That's not what they're being paid for by their employers.

I'd argue that the information in the study confirms that they've done exactly what their employers wanted.  But they will need to adjust policies to keep it up.

[Josephus]

I'm shocked. Trickle down economics was the basis of all I believe in.

Next you'll be telling me Santa Claus is not real.

[DGuller]

I hope someone brought this study to the attention of Republicans in Congress, so that they can adjust their policy preference in light of new information.

That's not what they're being paid for by their employers.

Oh, really?  That's disappointing. 

[Barrister]

One of my more favourite articles was one by Michael Kinsley where he talks about going in for brain surgery, and what his first words should be when he wakes up.

Yes, It Really Is Brain Surgery
By Michael Kinsley    Sunday, July 16, 2006

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Like NASA before the first moon landing, I have been soliciting advice about what to say when I wake up from brain surgery. That's right, brain surgery—it's a real conversation stopper, isn't it? There aren't many things you can say these days that retain their shock value, but that is one of them. "So, Mike—got any summer plans?" "Why, yes, next Tuesday I'm having brain surgery. How about you?" In the age of angioplasty and Lipitor, even the heart has lost much of its metaphorical power, at least in the medical context. People are willing to accept it as a collection of muscles and blood vessels rather than—or at least in addition to—the seat of various emotions. But the brain remains the seat of the self itself in physical reality as well as in metaphor. And the brain as metaphor looms so large that there isn't much room left for the simultaneous physical reality that the brain is material, performs mechanical functions, can break down and sometimes can be repaired. So brain surgery remains shocking and mystical. People don't expect to run into someone who's having brain surgery next week squeezing the melons at Whole Foods. (Unless, of course, he's squeezing them and shrieking, "Why don't you answer? Hello? Hello?")
Self-indulgently, I've been dropping the conversational bomb of brain surgery more often than absolutely necessary just to enjoy the reaction. And why not? I deserve that treat. After all, I'm going to be having brain surgery.

Brain surgery is a license for self-indulgence. Cancel that dentist's appointment; you've suffered enough. (Though technically, before you go under, you haven't actually suffered at all.) Take out the trash? "C'mon, honey, I've got BRAIN SURGERY next week." Writers devote a lot of creative energy to dreaming up reasons not to write. One of the all-time best came recently from Washington Post columnist Anne Applebaum, who told her readers that she was going to stop writing the column for a while because her husband had become Defense Minister of Poland, and she was moving to Warsaw. Sure, Anne, and I'm taking the summer off because I'm having brain surgery. In Cleveland. But it's true. The operation is called deep-brain stimulation (DBS). They stick a couple of wires into your head, run them around your ears and into batteries that are implanted in your chest. Then current from the batteries zaps some bad signals in your brain so that good signals can be heard by the rest of your body. When it works, as it generally does, it greatly reduces the symptoms of Parkinson's disease. I wrote in Time 41/2 years ago about having PD and adopting a strategy of denial: pretending to myself and others that I didn't have it. By now my symptoms are past the point where dishonesty and self-deception are a useful approach. But maybe this operation will get me back there.

As I write, surgery is a few days off. But you can assume, if you are reading this, that it went well. And thank you for your concern. Now, where was I? Oh, yes, brain surgery. Thinking I would give self-deception one more shot, I tried to convince myself that dbs isn't really brain surgery. They don't crack open your skull; they just drill a couple of small holes to put the wires through. Tiny holes. Itsy-bitsy holes. Teensy-weensy little holes. The propaganda they give you when you sign up for the operation describes the holes as "dime-sized." That took me aback. The dime, there's no denying, is a seriously undersized coin. But frankly, I wasn't thinking coins at all. I was thinking grains of sand. A dime is huge! The hospital printout of all the things you can't do afterward describes it as "major brain surgery." Is there minor brain surgery?

To an American middle-class professional of the 21st century, what is scariest about brain surgery isn't the ever present risk of disaster or even the chance of unexpected side effects. It's the danger that people will look at you differently. We are all brain snobs, and we are all—those of us over 20 or so—losing brain cells. But if you're walking around with wires in your head and batteries flanking your chest, every senior moment when you can't remember the term for, you know, when they drill holes in your skull—right, brain surgery—is ... is ... is ... well, it's going to seem significant to others and to you.

That's why my first words coming out of surgery are so important. They have got to tell the world—and convince myself—that I am all there. Of course, there are the obvious jokes about brain surgery ("Well, it wasn't exactly rocket science") and about those wires in my head ("Can you hear me now?"). There is Dada ("I am the Defense Minister of Poland. Who the hell are you?"). And slapstick ("I feel as if I've lost 10 pounds ... uh oh"). I'm still working on it.

Editor's note: Kinsley's surgery took place on July 12 and went fine. His first words were, "Well, of course, when you cut taxes, government revenues go up. Why couldn't I see that before?"

http://content.time.com/time/health/article/0,8599,1214919,00.html

[Syt]

https://twitter.com/thehill/status/1340011857835405312?s=20

Sen. Ron Johnson: "One of the reasons we are currently $27.4 trillion in debt is we only speak about need, we only talk in terms of compassion."

[Eddie Teach]

What the hell has Elon Musk been up to?

[grumbler]

What the hell has Elon Musk been up to?

Exploding share price for Tesla.  He should sell out now, if he can do it.  There's no way Tesla is worth more than the next 5 auto companies combined.

[Legbiter]

You can find a "scientific" study to justify literally anything you'd want. Academia apart from narrow technical fields only teaches you how to perform in academia.  The biggest reason I loathe trickle-down economics theory is my own personal experience watching the local elite in run up to the 2008 Crash and how their connections bailed them out while the rest of us got the full Stalingrad school of personal survival. Ultimately, we did very successfully come together as a nation, but it left a scar.

[Valmy]

Academia apart from narrow technical fields only teaches you how to perform in academia.

Well you have to admit the "narrow technical fields" are a pretty significant chunk though.

[fromtia]

Taxes on the rich just haven't been cut enough. Duh.