Audio By Carbonatix
The Republican presidential candidates all agree on one thing — the same mantra between all their lines. They all want us to believe that the extreme polarity of rich and poor in this country is an expression of natural law.
The super-rich just have to get super-richer. Everybody else, sadly, must accept the hammer. Thus spake Zaronmittnewtrick.
The “Laffer curve,” basically the idea that the only way to raise government revenue is to cut taxes on the rich, is still high Republican dogma. But what if it’s just not true?
What if we could raise taxes on the rich enough to solve much of our deficit problems without putting so much as a ding in national economic growth?
Oh, class warfare, they shall cry! Class warfare! Well, OK. At a certain point if that’s how they insist on taking it, giddyap!
Eduardo Porter has a column on the front page of The New York Times business section today citing a new body of research pointing to the possibility that top marginal tax rates could be almost doubled, bringing in trillions and seriously reducing our ratio of debt to GDP without slowing down growth by the beat of a single butterfly wing.
Part of the picture is the extreme reduction in top marginal rates since the 1950s — from 90 percent to less than 30 at one point — and the dramatic lack of impact that reduction has had on growth. Just for instance: Under Clinton, Porter points out, tax rates rose, and the economy surged. Under Bush the top rates fell, and the economy tanked.
In other words we have lived through a national experiment on the Laffer curve, and the results are unmistakable. It’s a joke.
During the same period, the slashing of top tax rates has had another unmistakable outcome — the extreme polarizing of income in this country. We have talked about this before, you and I, in discussions of the work of UT Austin economist James Galbraith. Galbraith takes all of the shibboleths about income disparity — it’s globalization, it’s education, it’s something about iPhones — and shoots them down one by one the hard way, with research and numbers. And then he says there’s really not much mystery.
It’s the tax code, stupid. All the money’s flowing to the top 0.1 of a percent, because the top 10th of a percent got the Republicans to change the tax code to steer the money their way in a huge distortion. So what we need to do is steer it back.
Porter’s column today discusses another aspect of Republican dogma — behavioral change by the rich. This is the notion that if you don’t let the top 10th of a percent have all the money, they won’t want to be the top 10th of a percent any more. Such a burden, you know.
They will get really really discouraged and suspend their economic activity, and then we won’t have rich people any more, and, as we know, rich people own the companies that employ people, so if they don’t want to be rich any more we won’t have any companies, and then where will we work?
Interesting concept. I have three hamburgers. You have none. But if you pass some law forcing me to give you half a hamburger, I will get depressed and not want to have any hamburgers at all. Then you won’t have a hamburger. So there.
We hear it a lot in Dallas, usually pronounced as indisputable fact. Whenever I hear it, I always wonder this: Let’s say it’s time for all the super-rich people to get depressed and stop owning companies.
Who’s going to get the word out to the Pakistani immigrants, the Haitians, the Mexicans, the Ukrainians and all the rest of the hungry ambitious newcomers to our shores, not to mention the smart kids from small towns in East Texas getting their first taste of bright lights, big city?
Someone will have to make sure all those people understand that the American dream is being suspended as political punishment for the left. Otherwise, if the ambitious immigrants and the East Texas kids don’t get the memo, they might view this abandonment by the super-rich as a pretty cool opportunity. Then when the ex-rich get over their depression and decide to come back and own all companies again, there might not be any companies available.
Porter points to a another study suggesting there is less to worry about here than we might think. He says, “That’s because a lot of what the rich do does not, in fact, generate economic growth. So if they reduced their effort in response to higher taxes, the economy wouldn’t suffer.”
I have always wondered about that. In the post-war era industrial belt where I grew up, the rich made stuff like cars. We needed cars. We would not have wanted to see a suspension of car-making.
I look at the party pics in the local daily newspaper and magazines, it seems to me our own super-rich here in Dallas are involved most of the time in balloon releases. You know, they’re always gathering in massive assemblages to give one another elaborate Oscar-like awards for “Best Third Stepmom” or something.
Do they even have an industry?
At any rate, we should begin to view this gathering of economic findings on income polarity as good news. There are solutions out there. Even as we speak, the solutions are probably gathering themselves at a koi pond preparing to give each other an Oscar for something and then release the balloons.
The balloons are a good thing. They make them all so easy to find.
