This is in response to a letter to the editor in the Jan. 18 edition of The Central Virginian submitted by Robert Murto from Orange, Virginia, “The truth is always the first casualty.” Mr. Murto obviously does not understand how to discover the “truth” surrounding the myths of American economics.
The theory that Congressional legislation benefitting the rich will trickle down to all citizens sounds great, but reality tells another story. The Republican promotion of the trickle-down myth ignores three basic issues: (1) unemployment is a lagging occurrence of tax breaks and employment doesn’t always occur in the corporate host country getting the tax break. (2) Lower corporate tax rates do not increase economic growth. (3) Lower and middle income people don’t get the same benefits of tax cuts as the wealthy do.
During the years 1979 and 2005 (the Reagan and Bush tax cut eras), the bottom fifth income level after-tax household income rose 6 percent whereas the top fifth income rose 80 percent, and the top 1 percent tripled their income. Sounds more like “trickle up economics” to me.
The Brookings Institution’s William Gale and Dartmouth College’s Andrew Samwick state “that tax cuts are unlikely to substantially boost growth and that tax cuts that increase deficits can harm growth… Conservatives often point to President Ronald Reagan’s 1981 tax cuts as evidence that supply-side tax cuts accelerate economic growth. In fact, despite the legend, there is little evidence that the personal income tax cuts enacted by President Reagan in 1981 meaningfully boosted the economy; “… the so-called Reagan recovery of the early 1980s was driven by monetary policy, not tax cuts.”
On the state level, compare the results of tax cuts for the wealthy in Kansas in 2012 to the tax increases for the wealthy in California. Since then, California has enjoyed one of the strongest economic growth rates of any state, while Kansas has lagged behind other states and fallen below average in economic growth and job creation. Kansas’ tax cuts have severely worsened the state’s fiscal situation, resulting in deep cuts in education and other state services.
Economist Jared Bernstein states that there is “no correlation between the top marginal tax rate and per capita economic growth — nor between the top marginal tax rate and growth in employment, capital investment, productivity, or pretax median family incomes. Cutting taxes for the wealthy does not result in faster growth or increasing living standards. “
In truth, federal investments in education, research, and infrastructure all create jobs and long-term economic growth. Researchers have found that Medicaid, nutrition assistance, housing subsidies, tax credits and environmental protection all improve health outcomes and, subsequently, increase productivity and increase children’s educational attainment and future earnings. Then why are “conservative” Republicans cutting these federal programs? Thus, tax cuts that threaten these programs undermine the goal of our country’s prosperity. This is the goal of the ‘conservative” Republican agenda and it is changing America for the worse!
Mark S. Chapman