I missed this in December, but it’s forever timely, particularly with the Arkansas legislature in session and slavering to dole out a huge state surplus in the form of tax cuts primarily benefitting millionaires.
Tax cuts for the wealthy have long drawn support from conservative lawmakers and economists who argue that such measures will “trickle down” and eventually boost jobs and incomes for everyone else. But a new study from the London School of Economics says 50 years of such tax cuts have only helped one group — the rich.
The new paper, by David Hope of the London School of Economics and Julian Limberg of King’s College London, examines 18 developed countries — from Australia to the United States — over a 50-year period from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes on the wealthy, with those that didn’t, and then examined their economic outcomes.
Per capita gross domestic product and unemployment rates were nearly identical after five years in countries that slashed taxes on the rich and in those that didn’t, the study found.
But the analysis discovered one major change: The incomes of the rich grew much faster in countries where tax rates were lowered. Instead of trickling down to the middle class, tax cuts for the rich may not accomplish much more than help the rich keep more of their riches and exacerbate income inequality, the research indicates.
“Based on our research, we would argue that the economic rationale for keeping taxes on the rich low is weak,” Julian Limberg, a co-author of the study and a lecturer in public policy at King’s College London, said in an email to CBS MoneyWatch. “In fact, if we look back into history, the period with the highest taxes on the rich — the postwar period — was also a period with high economic growth and low unemployment.”
Yet Asa and them think knocking the top tax rate in Arkansas to 4.9 percent (down 30 percent from its previous high) will make this a land of economic milk and honey. And he’d cut it even more for people who move here, discriminating against the hundreds of thousands of impoverished wage slaves of Arkansas. Tim Griffin is running around talking about doing away with the income tax entirely. How we’ll magically run schools and prisons and provide health care? No answers yet.
And this study was BEFORE the Trump tax cut for millionaires. We know how that went. The 400 richest American families now have effective tax rates LOWER than middle-class Americans.
BREAKING: U.S. billionaires have grown their collective wealth by $1 trillion since mid-March. That’s more than it would cost to send a $3,000 stimulus check to every person in America.
More of our latest research here: https://t.co/wvfXxl92yK pic.twitter.com/sYgDKiuW70
— Americans For Tax Fairness (@4TaxFairness) December 9, 2020