I’ve been calling the Republicans the party of no ideas but I’m wrong about that. They do have one idea – tax cuts. Tax cuts are the solution to any problem. You have to give them credit, they’ve managed to make an upopular idea (continuing the tax cuts from the wealthy) and turned it into a political hot potato, with Blue Dogs cowering in fear of being accused of “raising taxes.”
What’s not often pointed out is that we’re already operating under the Bush tax cuts and they’ve been an abysmal failure. In fact, tax rates are the lowest they’ve been in decades. The last decade was horrible for job creation and income inequality. The evidence is that when taxes are low for the wealthy, they tend to keep it for themselves instead of creating jobs or investing. Remember the Slate series on income inequality?
In the period labelled “The Great Compression” marginal tax rates on the wealthy were much higher – at one point reaching 90%. You see the income inequality start to skyrocket when Reagan began cutting those tax rates (even then the highest tax rates were 50%).
Even though Republicans have found a lot of greedy Wall Street executives to whine about how hard their life is, even 64% of people with incomes greater than $250K think their taxes should be higher. Some are even speaking out. Garret Greuner wrote an op-ed for the Los Angeles Times arguing for tax increases.
For nearly the last decade, I’ve paid income taxes at the lowest rates of my professional career. Before that, I paid at higher rates. And if you want the simple, honest truth, from my perspective as an entrepreneur, the fluctuation didn’t affect what I did with my money. None of my investments has ever been motivated by the rate at which I would have to pay personal income tax.
As history demonstrates, modest changes in the tax rate for wealthy taxpayers don’t make much of a difference if the goal is to build new companies, drive technological development and stimulate new industries. Almost a decade ago, President George W. Bush and his Republican colleagues in Congress pushed through a massive reduction in marginal tax rates, a reduction that benefitted the wealthy far more than other taxpayers.
We were told the cuts would accelerate business growth and create jobs. Instead, we got nearly a decade of anemic job growth, stagnating wages, declining incomes and high inequality.
The supply-side, trickle-down economic policies of the last decade benefitted people like me, but the wealth didn’t trickle down. So while we did quite well, people who live from paycheck to paycheck didn’t.
Our politics are so silly that we can’t even discuss what the tax rates should really be and what is effective. I, for one, am tired of hearing about the sadness of rich people.