Friday, March 29, 2024

Proposal doesnt help lower incomes

Reaganomics supporters say tax cuts benefiting the wealthiest Americans spur unprecedented growth and cite the tremendous economic expansion during President Reagan’s time in office as proof that we should again cut taxes in this manner. They will also say everyone paid less tax as a result of him.

But when one adds payroll taxes (like Social Security) into the equation, the poorest 20 percent actually saw a 15 percent increase in their taxes, while the richest had a reduction of 15 percent, despite the decrease in everyone’s marginal rate.

And while it is true the U.S. economy grew annually at about 2.5 percent during the Reagan years, take a look at what happened in the 1950s: During this time, the top marginal rate for the richest people was 88 percent. And the economy grew more than 4 percent annually. Couple this with the more recent economic growth and today’s top marginal rate of nearly 40 percent and you will see that history is not with the supply-siders.

So should we go back to taxing the wealthy at 88 percent? No, that would be unfair, and fairness was the original reason why Bush wanted the tax cut. But now he says we need to bolster the economy; why is he touting the same tax plan? Would it not make greater sense to weight the cut more toward the lower 80 percent of the wage earners, who will buy more products, thus making more money for the top 20 percent?

At least history is on the side of trickle-up economics.

Dane Hahn
1998 MSU graduate

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