President Joe Biden has just issued his series of tax hikes. Here’s the gist: the president wants to raise interest rates for top earners across the board. Top earners, investors and corporations are supposed to face much higher tax rates, according to the administration’s budget plan. As a member of the opposition, given these proposals, how do you position yourself to go unpunished?
First, you are afraid. Above all, you don’t deal with advocating for lower tax rates at the top. Since all the evidence, from the 1980s, 1960s and 1920s, shows that a reduction in top tax rates results in a more than 400% increase in tax revenue for the group directly affected, it must avoid any suggestion to resist the higher tax. increases the rate. Otherwise, the electorate may find that you see through demagoguery to raise top tax rates. How are you supposed to lose your election and your reputation as the heir to Mellon, Kennedy and Reagan unless you submit?
Candidate Mitt Romney in 2012, as he moderates proposed tax rate cuts with caps: “I will not, under any circumstances, reduce the share paid by the highest income taxpayers.” Reduce the share? How about increasing it wonderfully by reducing the percentage of top earners in particular?
Second, you are temporizing. You cite the example of President George W. Bush. You say you’re in favor of tax rate cuts across the board, but if you accept small permanent cuts at the top, you’re saddled with family tax credits and marginal rate cuts that must surely warm the hearts of the working class. and make the whole thing—especially the tiny rate cuts at the top—both gradual over a long period of time and then sunset after a few years. Faking it to actually cut tax rates at the top brings a great recession and you become a laughing stock based on your financial history. A well-known socialist takes your place as president. Perfection in being roadkill.
Third, spending scares you. So Reagan won the debate, on any serious analysis, of cutting tax rates at the top. He absurdly lowered personals, from 70 to 50 to 28%. Bush and Clinton’s successors split the difference between those top Reagan rates, 50 and 28, we ended up with something in the 30s. Fiscal deficit: eliminated by 1998. Growth: 4 percent per year for six years in both the 1980s and 1990s. Net new jobs 1980-2000: 38 million. Average household income: huge jumps. The Federal Reserve after four consecutive years of federal budget surpluses in 2001: we fear that there is not going to be enough government debt to conduct open market operations.
Rescue, there’s no way you’re going to be roadkill swimming in these conditions. You have to say that the spending boom of 2001-2023 has taken tax rate cuts—especially at the top—off the table. Government spending rose from 17 percent of GDP to over 20 percent during this time. Come at his heel. Let it take over. Confirm that regardless of the record of tax rate cuts – especially at the top – the spending/debt issue by 2023 has become very serious. The debt is at $30 trillion. It is true that cuts in tax rates at the top create a 400 percent increase in income for the highest group, over a century. But the goal is to be roadworthy.
Lately, you’ve been letting inequality work for you. You let it hit you. You long to feel his fists. The wealthiest cohorts that were largely separated from everyone else come from the 1980s, until now. You make it an absolute issue. Suppress the knowledge that all the jobs in this economy come from the after-tax capital growth of the top 1 percent. You are playing ball with the idea that tax shelter is somehow reduced when the return to housing increases with increases in top tax rates. You dismiss the fact that, including average state tax burdens, tax rates at the top are objectively unmoderate at levels well over 40 percent and often over 50 percent, driving the capital of the rich away from productive use in the service of general welfare.
These are the tried and true ways to put scars on your back President Biden, he of the new high income proposals.
The electorate, including the abundant millions of ordinary earners, fully understands that our business rich are responsible for organizing the productivity of our economy. If you want to be so anti-populist as to not admit it, one sure way is to be unwilling to attack the president’s tax proposals for top earners wholeheartedly.
For theory, history and facts, see our new book, Taxes have consequences, history of the income tax and its effect on the economy.