Brownback’s over-zealous approach to tax policy was driven by the same fallacious system of voodoo economics that led Ronald Reagan to so fundamentally transform the United States’ tax system in the 1980s. The proponents of supply side economics (often referred to derisively as “trickle-down economics”) argue that cutting top personal income tax rates and corporate taxes drives economic expansion and job growth and will actually increase tax revenues because of the economic multipliers provided by the prescribed tax cuts. One major problem with this theory: it simply does not work in reality. Perhaps the most vocal supporter of this economic theory is Arthur Laffer, the “economist” who advised Ronald Reagan on tax policy during his 1980 presidential campaign. Laffer was recruited to advise Governor Brownback and his fellow ideologues on their tax cut plan. Unfortunately, Laffer and Brownback seem to have forgotten the experience of the 1980s, as the outcome of these policies in the Reagan years were massive federal deficits and no real improvement in the national economy. The truth is that lowering income and corporate tax rates – especially on the wealthy, which supply-side economists emphasize – does very little to increase economic growth or create jobs. The economy is a much more complicated machine than these analysts realize, and their overwhelming focus on taxes leads them to make ridiculous and empirically vacuous claims. For proof of how poorly trickle-down economics performs in reality, we need only to look at the economic history of the United States in recent decades. In the 1950s and 1960s, top marginal income tax rates were as high as 90% on the highest incomes, yet economic growth was substantially higher then compared to the 2000s. A recent report by the Congressional Research Service finds very little evidence that tax reductions have any relation to increased economic growth or job creation.
Posted on: Sun, 04 Jan 2015 18:51:25 +0000
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