Thursday, 18 December 2014 / TRUTH-OUT.ORG
  • Street People: Do You Just "Walk On By"?

    Is there a helpful way to respond when you encounter one of the approximately 578,424 people who were homeless on any given night in the United States today?

  • Quiet Distress Among the (Ex) Rich

    Yves Smith: The fact that economic distress has moved pretty high up the food chain is a sign that this recovery isn't all that it is cracked up to be.

Why Letting the Bush Tax Cuts for the Rich Expire Will Not Hurt the Economy

Monday, 09 July 2012 13:14 By Pat Garofalo, ThinkProgress | News analysis

President Obama is planning to call on Congress today to extend the Bush tax cuts for another year, but only for those making less than $250,000. The Bush tax cut package is scheduled to expire at the end of the year, and of course, Republicans have said that they are only interested in extending all of the cuts, including those for the wealthy. That would mean spending billions of dollars on cuts where more than half of the benefit accrues to the richest 5 percent of households.

The administration, however, claims that it will oppose any extension that does not include the $250,000 cut-off. Obama adviser Robert Gibbs insisted yesterday that Obama is "100 percent committed" to ending the tax breaks for the wealthy.

Republicans, of course, will charge that raising taxes on the rich will inevitably harm economic growth and job creation. However, history has revealed that that's simply not the case. As this chart shows, annual economic growth has been strongest when the top tax rate was higher than it is today:

taxratesgrowth

Job creation has also been stronger when the top tax rate was higher:

taxesrichjobs

Already, taxes on both the rich and investment income (which for the last few decades has been taxed at a lower rate than wage income) are at historic lows, but they didn't lead to the job creation that was promised by the Bush administration:

historictaxes

So Republican claims about tax increases on the rich destroying the economy — which they make every time such a policy is suggested — are just fearmongering, with no evidence backing them up.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

Pat Garofalo

Pat Garofalo is Economic Policy Editor for ThinkProgress.org and The Progress Report at American Progress.


Hide Comments

blog comments powered by Disqus
GET DAILY TRUTHOUT UPDATES

FOLLOW togtorsstottofb


Why Letting the Bush Tax Cuts for the Rich Expire Will Not Hurt the Economy

Monday, 09 July 2012 13:14 By Pat Garofalo, ThinkProgress | News analysis

President Obama is planning to call on Congress today to extend the Bush tax cuts for another year, but only for those making less than $250,000. The Bush tax cut package is scheduled to expire at the end of the year, and of course, Republicans have said that they are only interested in extending all of the cuts, including those for the wealthy. That would mean spending billions of dollars on cuts where more than half of the benefit accrues to the richest 5 percent of households.

The administration, however, claims that it will oppose any extension that does not include the $250,000 cut-off. Obama adviser Robert Gibbs insisted yesterday that Obama is "100 percent committed" to ending the tax breaks for the wealthy.

Republicans, of course, will charge that raising taxes on the rich will inevitably harm economic growth and job creation. However, history has revealed that that's simply not the case. As this chart shows, annual economic growth has been strongest when the top tax rate was higher than it is today:

taxratesgrowth

Job creation has also been stronger when the top tax rate was higher:

taxesrichjobs

Already, taxes on both the rich and investment income (which for the last few decades has been taxed at a lower rate than wage income) are at historic lows, but they didn't lead to the job creation that was promised by the Bush administration:

historictaxes

So Republican claims about tax increases on the rich destroying the economy — which they make every time such a policy is suggested — are just fearmongering, with no evidence backing them up.

This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.

Pat Garofalo

Pat Garofalo is Economic Policy Editor for ThinkProgress.org and The Progress Report at American Progress.


Hide Comments

blog comments powered by Disqus