27
Taxing the rich is good for the economy
Commentator Robert Reich says increased tax revenue greases the wheels of economic growth
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
One of the most pernicious economic falsehoods you'll hear during the next seven months of political campaigning is there's a necessary tradeoff between fairness and growth. By this view, if we raise taxes on the wealthy the economy can't grow as fast.
Wrong. Taxes were far higher on top incomes in the three decades after World War II than they've been since. And the distribution of income was far more equal. Yet the American economy grew faster in those years than it's grown since tax rates were slashed in 1981.
This wasn't a post-war aberration. Bill Clinton raised taxes on the wealthy in the 1990s, and the economy produced faster job growth and higher wages than it did after George W. Bush slashed taxes on the rich in his first term.
If you need more evidence, consider modern Germany, where taxes on the wealthy are much higher than they are here and the distribution of income is far more equal. But Germany's average annual growth has been faster than that in the United States.
You see, higher taxes on the wealthy can finance more investments in infrastructure and education, which are vital for growth and the economic prospects of the middle class.
Higher taxes on the wealthy also allow for lower taxes on the middle -- potentially restoring enough middle class purchasing power to keep the economy going.
As we've seen in recent years, when disposable income is concentrated at the top, the middle class doesn't have enough money to boost the economy.
What we should have learned over the last half century is that growth doesn't trickle down from the top. It percolates upward from working people who are adequately educated, sufficiently rewarded, and who feel they have a fair chance to make it in America.
Fairness isn't incompatible with growth. It's necessary for it.
Pages
- ‹ previous
- 1
- 2
- 3
- next ›
Surprised Marketplace give Berkley Progressives such a pulpuit to preach from, other than to stir up controvery. Anti private equity Dr. Reich promotes a policy of mutual distruction. Berkley Progressives (BP) cause economic spills doing more damage than the 20 billion other BP spill. In California, they control the direction of the State, helping cut private equity by 30% for most homeowners in the state, doing nothing to help create jobs (their master plan for unemployment is to have them move to Texas for jobs). And really, if we spend a few trillion dollars of debt each year, one would expect more jobs for excessively wasteful jobs for infrastructure with negative rates of return. Tax the rich, make them pay rates like their secretaries. Hum, last I checked with a secretary yesterday, she paid zero taxes. In fact I have yet to find one who is single and pays federal income taxes. Considering 44% of the population do not pay federal taxes, the BPers are really about fairness.
Robert Reich is a died in the wool European Socialist. Why don't you balance Reich's far left perspective by having counter comments by Robert Samuelson. See Samuelson's article in this week's Newsweek, "Warren Buffett as Political Prop", where he puts in perspective the political Buffett Rule about taxing the rich.
Mr. Reich's commentary is like broken record. Has anyone at "Market place" spent sometime thinking what could be the reason why middle class incomes dont keep up with the time? Do you really think it is tax policy? Why don't you think globalization and moving of manufacturing jobs overseas has something to do with this? Productive part of US economy is shrinking and thus you cannot demand income increases.
In reply to gb_gb:
Bingo! And don't forget, the United States currently already has the highest corporate tax rate among our major competitors.
Because of the way the United States taxes revenues that were earned overseas and repatriated to the United States, U.S. tax law actually ENCOURAGES companies to keep those earnings overseas, building overseas factories and hiring overseas employees. These excessively high tax rates cost American jobs.
I attended an annual meeting for a major semiconductor company two years ago. Despite having billions of dollars in cash, the company borrowed $1B to fund product development and to fund a stock buy-back program. Why would any company borrow so heavily when it already had the money in the bank? It seemed like madness or at least fiscal mismanagement.
Nope! It was fiscal brilliance. Most of that company's cash was earned overseas and sat in overseas accounts earning. If it were re-patriated to the United States, roughly 30% would disappear in taxes. Instead, they could borrow the funds at record-low interest rates thanks to Federal Reserve policy. Heck, thanks to other nonsense in the U.S. tax law, they could even write off the interest expense. What a system!
The U.S. tax system is a hodge-podge of outdated, counter-productive policies. If you are big enough, you can hire lobbyists and push politicians to carve out special protections. The Democrats currently in power seem only concerned about raising top marginal rates on the wealthy, which does NOTHING to address ANY of the real underlying problems. It may be good politics, but it's horrible leadership.
We need to modernize our tax system, reduce loopholes, and make it globally competitive.
I couldn't agree more.
For Mr. Reich to imply that the result of a nations economy is due to the control of one variable, is rather absurd. Gosh if only the intricacies of a nations' success\wealth were so simple. Robert, correlation does not imply causality.
Putting more rich tax money in the pot for the middle class to spend, will not provide the stimulous necessary to restart the economy. It places a portion of the money in the hands of retailers, distributors and transport companies and the rest goes overseas to pay the manufacturer. We don't need to continue to stimulate Southeast Asia. We need to stimulate manufacturing in THIS country. The strong middle class we've enjoyed in past years was based on manufacturing. We are a culture of shopping, and THAT is where our money goes, into our little gadgets and trinkets. We all vote with our dollars, and a rather large Southeast Asian country is winning by a landslide. When the vast majority of our products WERE made in the US, we kept that wealth in the US and with that money changing hands so quickly, due to our consumerism, wealth was created quickly. Trading is good when your trading partner reciprocates. Some of our current partners do not. Let's keep that money here. Stimulate manufacturing here.
NPR leans so far left that the middle of the road looks like radical right wing to them.
If I had Robert Reich as an Economics teacher in college, I would drop the course and find another less socialist teacher.
NPR just loves to plug his books too.
Thumbs down to NPR once again.
They are one step removed from Arianna Huffington's silly excuse for a newspaper.
C'mon Bob. You've come dangerously close to saying that increasing taxes will lead to economic growth. But, we can't re-define macroeconomic theory just to suit our desires. The thing you've omitted from your comparison to Germany is the trade balance. If we want real growth, we'll have to decrease imports and increase exports.
Seems like the majority of the previous comments wish to ignore history and/or ignore or dispute facts. There was no mention of any political parties or campaigning... just laying out the historical truth -- higher taxes on the wealthy leads to greater investment in our country, greater growth of the economy, and more equal distribution of wealth. Sure the rich could invest more on their own, but, with exception of a few, they just aren't. The result of the Bush tax cuts' great increase of wealth in the top of the economic ladder while the middle and lower classes become poorer proves it. You can't just take facts you don't like, such as greater growth under Clinton's higher taxes on the rich (or even Eisenhower's during the Post WWII era, before my life time) and call it liberal bias. Just because liberals use facts doesn't mean they are biased, it just means TRUTH is on their side. However, when the conservatives fabricate arguments such as saying the "job creators" and "investors" need more money to grow the economy, that is worse than bias, it's intentionally misleading ignorant people into voting against their own and their country's economic best interest for the selfish wants of a few.
Pages
- ‹ previous
- 1
- 2
- 3
- next ›
