Are Americans 'catching on' tax cuts for the rich don't work?
By: Cahir O'Doherty | Published Sunday, December 5, 2010, 9:20 AM | Updated Friday, September 9, 2011, 9:57 PM
President
Ronald Regan was fond of citing "trickle-down" economic theory to bolster his yearly round of tax cuts for the richest people in
America.
It stood to reason, he said - if the rich keep more of their money then that will somehow translate into more money and job creation for the American people.
The problem for the
GOP is that it didn't, and it doesn't, and the American people may be finally catching on.
As if to underline the fact along comes billionaire businessman
Warren Buffet this week, inserting himself into the most contentious tax debate doing the rounds: whether or not we should extend
George W. Bush's so-called tax cuts for the rich.
Buffet made two points: Americans at the high-end of the tax bracket have never had it so good and the tax cuts as an economic public policy have not benefited the country.
"The rich are always going to say that, you know, just give us more money and we’ll go out and spend more and then it will all trickle down to the rest of you," Buffet told the press. "But that has not worked the last ten years, and I hope the American public is catching on."
But are the American public catching on? Buffet said that we should keep the tax cuts for the middle class but America's richest could comfortably weather the recession and help cut the deficit by paying tax rates established in the Clinton era, which - incidentally - were still among the lowest tax rates on the rich in modern American history.
"If anything, taxes for the lower and middle class and maybe even the upper middle class should even probably be cut further," Buffett said. "But I think that people at the high end - people like myself - should be paying a lot more in taxes. We have it better than we’ve ever had it."
America's had ten years of Bush era tax cuts for the nation's wealthiest, and the time has come to ask where are all the jobs that were promised by the "trickle-down" theory? It's worth asking because "trickle-down" theory has been a sacred tenant of the Republican Party doctrine for decades. It's worth asking before we balloon the deficit for years to come to pay for it.
As
The Wall Street Journal reported this week, President Bush has the worst track record for job creation since the American government began keeping records in 1939. The Bush administration created just 1.1 million jobs net, while the Clinton administration created 22.7 million.
So much for "trickle-down."
Aren't economic policies and tax cuts that boost broad-based consumer income and spending a better way forward than making the already unimaginably rich even richer?
Are we finally catching on?
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Switch to the desktop site to post a comment.Monsoonman | Dec 10, 2010, 08:29 PM EST
If we just cleaned up the waste fraud and corruption, there would be no need for a tax increase.
hancock | Dec 06, 2010, 07:47 PM EST
Captain tom ? Are you a real Captain?
CaptainTom | Dec 06, 2010, 05:36 PM EST
I don't know about the rest of the American rabble but my wife and I caught on 30 years ago. The results of our recent election show that not enough voters have caught on yet.
Ajreaper | Dec 06, 2010, 01:05 PM EST
Go with a simple flat tax- we all pay 10%, 12%, whatever. No need then for a tax code that needs an entire wing of a library to be stored in and you eliminate the IRS completely. No matter the rate most everyone thinks they pay to much- just make it simple and across the board for individuals and corporations and be done with it.
Monsoonman | Dec 06, 2010, 12:39 PM EST
A big eastern state governor, started a site where people could voluntarily donate money for their favorite liberal charities. this was so the state wouldn't have to raise taxes on the whole population. The governor put seed money of 250,000 U.S to start. After a year the fund had 275,000. Nuff said about liberal compassion.
hancock | Dec 06, 2010, 12:13 PM EST
Taxes are high enough in America, if you want to pay more write a check, or get on a plane.
ballyhip | Dec 06, 2010, 10:57 AM EST
From Warren Buffett in 2007, “If class warfare is being waged in America,” he wrote, “my class is clearly winning.” We no longer live in the USA but the CSA, i. e Corporate States of America and have for some time. If we were true to the Ayn Rand capitalist model we would have no need for the Export-Import Bank and other government vehicles to aid industry but just try to get rid of them. The myth of the independent man is very powerful.
Shmrck5S | Dec 06, 2010, 09:29 AM EST
Chico-the most recent numbers I have seen in news reports (more than one report by the way) say that 2% of small businesses report income over the $250,000 mark. How many people in the country are samll business owners? I have no idea, but let's call it 10% to be generous. Even the most conservative of republican could still be elected if he ticked off only .2% (that's POINT 2%) of his electorate for the sake of helping that part of reducing the deficit (the other part being massive cuts in wasteful spending).
Chico2001 | Dec 06, 2010, 08:07 AM EST
What's wrong with the savings rate going up? Half the time, dudes like Cair here are telling us the savings rate is too low and that consumerism and credit card debt are bad! And by the way, if bankgs had more of our money in savings, there wouldn't have been an excuse to bail them out with -- once again -- taxpayer money. The central fallacy is that all money is governments first, and it decides what people get to keep from the sweat of their brow.
TheOldPerfessor | Dec 06, 2010, 08:03 AM EST
I see the faascists here have made their trips to the Fox Spin Room, and came up with nothing but name calling. This discussion is about how well it has worked to cut the taxes of the rich and run up the deficits. It's been a grand social experiment, and we have a clear answer as to how well it works.
Chico2001 | Dec 06, 2010, 08:01 AM EST
And by the way, I do not find that number in the Wall Street Journal anywhere. You seem to be taking it from a source that fails to count the millions and millions of jobs LOST on 9/11 and in the Clinton recession, but only counts from start to finish. This is disingenuous for the extreme -- and, I notice, you don't mention the millions of jobs created under Reagan, or the statistically full employment throughout Mr. Bush's terms. I'll tell you, the 4.5% unemployment under Mr. Bush's policies is looking great now as we're at 10% under Mr. Obama. You also fail to note that many small businesses, the engines of job growth, file as individuals over the $250,000 mark. You act under the pedantic notion that these are all Mr. Monopoly guys swimming around in their bank vaults of cash.
Chico2001 | Dec 06, 2010, 07:58 AM EST
"It stood to reason, he said - if the rich keep more of their money then that will somehow..." Now, come on. Nobody ever says their plan is "somehow," and neither did Reagan -- who, by the way, doubled the income to the Treasury in eight years. The trouble was, he didn't hold the Democrats in Congress to cutting spending; they spent all the largess. You cut taxes and the wealthy spend in the market much more wisely than people like you who think they are smarter than everyone else. You likewise get it wrong about Bush. Thank God he and Democrats in the Senate joined to cut taxes after the 9/11 attacks. It helped us bounce right back. Ireland lowered corporate taxes to draw investment, did they not? If anyone doesn't understand the concept of tax cuts, think of it as a sale. When you want more sales, you cut your prices and sell more volume. I think you do understand, which is why you misrepresent and out-right lie about job creation. Think of it this way: If you offer 15 teens a piece of candy for every 15 push-ups they do, and 1 for every 5 over that you'll get a lot more production than if you cap the pieces of candy a student can earn at five pieces. The lie is also put to your points by the fact that even Barack Obama is touting "tax cuts," although he's never actually passed any meaningful ones.
seamusmoore | Dec 06, 2010, 06:47 AM EST
seagreen: Ireland under Dev followed your economic protectionism policy from 1932-1958 and, quite frankly, it was not a winning formula. Large scale emigration out of Ireland from 1949 to 1963 because there were no jobs; Ireland being the only northern European nation that didn't experience a post WWII economic boom. Sean LeMass and TK Whittaker finally brought Ireland into the 20th century in the 1960's. Economic protectionism DOES NOT WORK (see Hawley-Smoot Tariff Act of 1930 which turned a severe recession into a world-wide depression. BTW, how does Walmart's lowest price retailing strategy fit into "jack up the price" economic analysis. Go to London sometime and price a Reebok sweatshirt there vs what it costs at Walmart, the price is about double across the pond. I am guessing that you don't like American football or hockey either judging from your comments. I was hoping that you are a soccer fan and might get taken out in the next Hillsborough.
vincem13 | Dec 06, 2010, 01:46 AM EST
Dear Comrade Cahir: As a journalist, I suppose that only poor people pay you to write stories? If so, you would be the first and only worker in any industry who could make a reliable living working on wages from poor people. The rest of the private sector - I know this is a shock- gets their income from rich people, somehow or another. And here is another shocker for you, comrade. Capitalism is not a zero-sum game. There is always more money to be made, more capital to be created. Until you socialists raise the taxes on the producers enough that they stop producing and hunker down. Then everybody loses. Ah! Then it becomes a Workers Paradise!
hancock | Dec 06, 2010, 12:35 AM EST
A bunch of off the boat Irish lefties telling us how dumb we are?
seamusmoore | Dec 05, 2010, 10:29 PM EST
Cahir: Any chance we could look back at the Clinton Years, particularly 1998-1999. GOP Congress (including 80% of the Democrats as well)cut capital gains (affect primarily the rich) tax rates in the Taxpayer Relief Act of 1997. Lo and behold, there was a surplus 2 years later. The WSJ didn't happen to break down the jobs data into 2001-6 and 2007-8(when Queen Nancy took the gavel)periods, did they? Let's not forget that at the end of Clinton's watch, the Y2K bubble happened in the tech sector, where 5 years of IT spending was crammed into 1998-9 because of the Y2K scare. That's when the real Celtic Tiger ended and the seeds for the balloon Celtic Tiger were sown by the adoption of the Euro.
porkheaven | Dec 05, 2010, 09:50 PM EST
The real problem is that the dam government can't say NO. the Democrates feel we need this socialized health care that you all have and not jobs and want to tax the health care benefits that we received thru employment.
feeneycj | Dec 05, 2010, 06:09 PM EST
you can tax the rich more, but government will then spend even more, then the rich will have to be taxed even more, and so on, until we're all poor, then who will pay more taxes? Why invest or do anything for gain? Tax more but at the same time, spend less.
seagreen | Dec 05, 2010, 06:06 PM EST
The private sector has made it quite clear how they can operate better than the US Govt. There are over 40,000 American companies manufacturing in China. They have managed to run domestic companies out of business, then jack the prices back here in North America once the surviving companies have been vanquished. With a few exceptions, the private sector could care less what happens to America, it is nothing but a huge marketplace where the public is placated with unending football an other nonsense! Where else do fighter planes fly over sporting events as part of the show,as if to validate the the ludicrous existence of the NFL. Perhaps when the tax situation becomes clear, we can start looking at import tarifs on items such as the now $129.00 kids hockey sticks. You can call it growth or what ever you want. I call it TREASON
olovely | Dec 05, 2010, 05:51 PM EST
Rich Americans save rather than spend their tax cuts. Tax cuts in 2001 and 2003 under President George W. Bush were followed by increases in the saving rate among the rich, according to data from Moody’s Analytics Inc. When taxes were raised under Bill Clinton, the saving rate fell.
1661996usmc | Dec 05, 2010, 05:36 PM EST
Who can reason with the Republican leaders? They just do't get it. Hoover (a Republican) started a recession and Bush (also a Republican) almost started another.
michaelidaho | Dec 05, 2010, 05:36 PM EST
To Cahir and all you other "economists," Raising taxes is about the dumbest thing any government could do during a recession. Just to provide one example. It is a well known fact that when FDR raised taxes during 1930's, it stifled a modest economic recovery and the economy nosedived into the second dip of the Great Depression. If you think the government can use your money more efficiently than the private sector, you obviously have no clue about economics.
killowen | Dec 05, 2010, 04:25 PM EST
amazing the concern shown the wealthy by the sheep. its the brain removal programming that does it. tooth fairy and santa stuff.
tom/peggy | Dec 05, 2010, 04:24 PM EST
All Americans taxes were cut under the Bush tax cuts and federal revenue rose to record amounts. That changed when the Democrats took over congress in 2006. The fact is that government could take every penny the rich have and it wouldn't be enough to get us out of this SPENDING hole.
Monsoonman | Dec 05, 2010, 02:18 PM EST
Reading the comments here reflects the truth in the book, "Animal Farm", where some animals are more equal than others. So your main female farm animal, champion of the "poor" made it to the pinnacle, Nancy Pelosi. This Goddesss and protector/defender of the poor had to have her own tax payer paid personal jet. Just the bar and food bill for that jet for her & her friends at taxpayer expense was 500K a year. Not to mention the special minimum wage expemptions she was able to fix for her husbands company which lets him pay his workers below minimum wage...Oh did I mention their vineyards and winery are non union? You are a flock of sheep.
VDDService | Dec 05, 2010, 01:34 PM EST
I happened to be in Maine,USA when Papa Bush was running against Reagan in 70s and heard Bush proclaim thet Reagan's "tricle down economics" policies nothing more than "Voodoo economics", so no the american public did not hear!! and this was the reason that "W" never consulted with his smarter father on the economy or Irag!! In the Republican's BAG !!
phobrien31 | Dec 05, 2010, 12:50 PM EST
Most Americans get it but the rich only have to buy 41 Senator's (all of whom are rich). So much for democracy!
FastEddy | Dec 05, 2010, 12:45 PM EST
So, now tax cuts is good? How about a rollback of sales taxes, then? If you thinks high taxes are so great, how about a tax on "illegal" workers? Or a tax on english speaking immigrants?
Nicomax | Dec 05, 2010, 12:41 PM EST
The Laffer Curve soon became a "curve ball" that struck out those at the bottom of the pile. The problem we have now is that the bottom of the pile is getting bigger all the time, and we a bunch of hot-shot rookies on the mound with some new, sharp-breaking curve balls.
Searlit | Dec 05, 2010, 12:39 PM EST
People have to help each other through this crisis, as their governments fail them. At least, the Irish know how to do this... I don't know about my fellow Americans, so many are living on fear these days, they've forgotten they can turn the channel.
mayoman | Dec 05, 2010, 11:32 AM EST
It was first called the Laffer Curve, after the professor that concocted this absurd fiction. And then The Trickle Down Theory. But whatever its called, its merely a scam, a fatuous intellectual construct designed for the wealthy to avoid paying their fair share of the taxes. Its truly a shame that the uber-rich's puppet, Senator Mitch McConnell is so deadset on giving the wealthy what they don't need but want; more money to invest. Indeed so dead-set is McConnell that he's holding up the extension of tax-breaks to the middle-class, as well the urgently needed START Treaty with Russia. It really should be no surprise to anyone who the GOP takes it marching orders from. Certainly not from people who work for a living. That's for sure.
TheOldPerfessor | Dec 05, 2010, 11:19 AM EST
We've had a ten year experiment with the concept of "Cutting taxes for the rich will make the economy better." How did that work out? Look around. It's no coincidence that the market crashes of 1929, 1987 and 2008 all happened under Republican presidents. Those Americans who get their "facts" from Rupert Murdoch and co. will never get a clue.
ballyhip | Dec 05, 2010, 11:13 AM EST
It is estimated that the top 2% of the American population control 38% of its wealth. Think about that for a moment we 308 million others.
jdi2269 | Dec 05, 2010, 11:11 AM EST
CLEARLY CAHIR DID NOT MAJOR IN FINANCE! MORE THAN LIKELY GUINNESS!
baldon73 | Dec 05, 2010, 11:09 AM EST
I think you are mistaken and ill informed. These aren't Cuts,they are repealing an INCREASE. It's their money to begin with not the Governments.You can't confiscate peoples money because you can't quit spending money you don't have.
seagreen | Dec 05, 2010, 10:21 AM EST
I agree with Seanfer7. The American public are perhaps the largest national population to ever not have a clue !! What do they not understand? This is a class war! The very people that are transfering the jobs to China, are the ones selling their products in North America, do not want to pay taxes, but at the same time want the sons and daughters of the unemployed sent around the world to defend their corporate interest. (Halliburton now based in Dubai)(NIKE in China) They could care less wether the rest of the nation survives, or people go under Yeah, all the flags,bumpersticker patriots pretending they care. These are the decendants of the people that ruled the coutry in 1900, they want it back that way, and are using the economic sword to accomplish their goal. Now they have the new Irish that they have thrown a fish to, and they really think they are part of it. Tea Party statement of the week "people should have to own land to vote" Where did we hear that before? The country has turned into a Bawdy House
torbreezy | Dec 05, 2010, 10:14 AM EST
"Our knowledge can only be finite while our ignorance must necessarily be infinite." These words of Karl Popper were prescient as regards to your clearly jaundiced perspective on two patriots: Ronald Reagan and GW Bush. How very sad . . . .
knockatee | Dec 05, 2010, 10:11 AM EST
I sure hope they're finally catching on. Perhaps everybody who reads this (assuming they're not all millionaires) should call their Senators and encourage them not to extend the tax cuts for the very wealthy.
patrickesq | Dec 05, 2010, 10:10 AM EST
Money corrupts American politics. The rich contribute generously to the Republicans who they know will do their bidding. How else can you explain the hypocrisy of Congressional Republicans who profess to desperately want to reduce the deficit, but will not let the large tax cut for the rich expire, despite the huge increase in the deficit it will cause. Yet they protest extending unemployment benefits for the people least able to fend for themselves, unless spending cuts are made to pay for the unemployment benefits. You would hope and think that the majority of American people would catch on to their shameful posturing.
seanfer7 | Dec 05, 2010, 09:26 AM EST
The American people by and large are as a stupid a bunch ever put on the face of this earth. Ronnie had alzheimer's but he is God. Georgie imbreed and now the savior. The rich don't give a Damn about USA, its money. The Rich have been shifting their cash into China and India for 15 years. Its the trickle down theory Piss on my back and tell me its raining.