Tax the Ones Who Have the Money

Should be obvious, but relentless repug lies for the past 40 years have made it necessary to drag out the statistics and the facts and the reality-based arguments.

Kevin Drum back in March:

In the Wall Street Journal a few days ago, Allan Meltzer hauled out the chart below, which shows that income shares of the rich have been rising all over the world for the past 30 years. His conclusion: if income inequality is changing everywhere, "that means domestic policy can't be the principal reason for the current spread between high earners and others."

Really?

SNIP

So although domestic policies certainly aren't the whole explanation for the exploding income of the rich — and nobody has ever claimed they are — the evidence certainly suggests they play a significant role. There's a big difference between 8% and 17%.

But Bruce Bartlett makes another point:

[Meltzer] seems to have missed an important implication of his own conclusion. If the rich are going to continue to get richer in low-tax countries and high-tax countries alike, then it must mean that high tax rates have far less of a disincentive effect on the rich than conservatives like Professor Meltzer continually proclaim.

He asserts that we should not raise tax rates on the wealthy, as President Obama has proposed, because it won’t do anything to reduce the share of income going to the ultrawealthy and thereby equalize the distribution of income. For the sake of argument, I will concede the point. But there is another very good reason to raise taxes on the ultrawealthy: the government needs the revenue.

Right. As it happens, I don't think tax policy is a great instrument for wealth redistribution. There are probably better ways to make society more egalitarian. On the other hand, tax policy is a great instrument for raising money that can be spent on programs that make society fairer and more decent — like universal healthcare, for example. And since (a) the evidence suggests that high-but-not-punitive tax rates have little effect on economic growth, and (b) growing income inequality means that the rich have ever more money, then it makes sense to tax the rich at higher rates. They're the ones benefiting from economic growth, they're the ones with the money, and they're the ones who can best afford it. If your income share doubles over the course of 30 years, it only makes sense that your tax rates ought to go up, not down.

This week, Think Progress exploded the myth of higher taxes on the rich hurting job growth.

Pat Garofalo:

According to the constant refrain from Republicans in Congress, the reason that tax rates can’t be raised on anyone, even the already super-wealthy, is because doing so will hurt economic growth. However, two prominent economists — Nobel Prize winner Peter Diamond and John Bates Clark award winner Emmanuel Saez — write in today’s Wall Street Journal that the conservative theory is basically bunk:

In the postwar U.S., higher top tax rates tend to go with higher economic growth — not lower. Indeed, according to the U.S. Department of Commerce’s Bureau of Economic Analysis, GDP annual growth per capita (to adjust for population growth) averaged 1.68% between 1980 and 2010 when top tax rates were relatively low, while growth averaged 2.23% between 1950 and 1980 when top tax rates were at or above 70%.

Neither does international evidence support a case for lower growth from higher top taxes. There is no clear correlation between economic growth since the 1970s and top tax-rate cuts across Organization for Economic Cooperation and Development countries.

Saez and Diamond also note that growth can be boosted if the revenue raised from higher taxes gets spend on infrastructure or other public investments. “The neglect of public investment over the last few decades suggests that the returns could be quite high,” they wrote.

As this chart shows, job growth has been weakest when the top tax rate was at its lowest:



In fact, job growth has been stronger when taxes are higher overall:

Of course, none of this should be construed as proving that higher taxes cause better job growth. But the Republican claim that higher taxes will blunt job growth is most certainly not true, as the data shows.

This country is not broke. This country has been robbed. The filthy, parasitic rich and their repug and Blue Dog servants in Congress have stolen the nation's life savings. Time to get it back.