WHY THE REPUBLICAN TAX PLAN IS MORE FAILED TRICKLE-DOWN…

October 11, 2017
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WHY THE REPUBLICAN TAX PLAN IS MORE FAILED TRICKLE-DOWN ECONOMICS*

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]

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