Saturday, October 6, 2012

New Study: Taxing the Rich Won't Tank Economy

We've been saying this before, and we'll say it again.  Contrary to what the top 1% and their lackeys like to claim, tax cuts on the rich do NOT create jobs or boost economic growth, and tax hikes on the rich do NOT destroy the economy.  And now a new study proves it yet again.  

In a nutshell, a 1%-of-GDP (i.e. $150 billion) tax cut on the bottom 90% of Americans boosts GDP by 2.7 percentage points over a two-year period, while a tax cut of the same size on the wealthiest 10% of Americans gives a statistically and practically insignificant boost of merely 0.13 percentage points (while significantly increasing economic inequality). So, if we really want to boost economic growth, we would cut (or perhaps even eliminate) the income tax on the bottom 90%, while raising rates on the top 10% and especially the top 1%.  That makes sense since 70% of our GDP is consumer spending, and the middle class are the ones who drive such spending.  The less money they have, the less they will spend.  And businesses will avoid hiring and making new investments and instead choose to sit on their excess cash (like they are doing now) when the consumer demand is simply not there.  It's not "class warfare," it's simple mathematics. 

But plutocratic Republicans never let mere facts get in the way of their greedy goals.