We've all heard the claims that cutting tax rates for the richest Americans will improve the standard of living for the working class. Supposedly, top-bracket tax breaks will result in more jobs being created, higher wages for the average worker, and an overall upturn in our economy. It's at the heart of the infamous trickle-down theory.
The past 40 years have seen a gradual decrease in the top bracket's income tax rate, from 91% in 1963 to 35% in 2003. It went as low as 28% in 1988 and 1989 due to legislation passed under Reagan, the trickle-down theory's most famous adherent. The Clinton years saw the top bracket hold steady at a higher rate of 39.6%, but under the younger Bush's tax-cut policies, the rich are once again paying less. The drastic change in tax policy that has taken place since the early 1960s gives us a great opportunity to study and evaluate the claims that lower taxes for the rich translate to more wealth for the average American.
http://www.faireconomy.org/research/TrickleDown.htmlDo Tax Cuts for the Wealthy Stimulate Employment?Economists from both sides of the political aisle argued from the beginning that tax cuts for the wealthy made no sense as a policy for stimulating new jobs. And experience has proved them right. Total private employment was actually lower in January 2005 than in January 2001, the first time since the Great Depression that employment has fallen during a president's term of office.
http://www.democraticunderground.com/discuss/duboard.php?az=post&forum=389&topic_id=8812078&mesg_id=8812078Economists Disagree With Bush On Relationship Between Massive Tax Cuts And ... Cuts In Deficit, Economic Growth ...President Bush and Republicans up for re-election have been touting lower-than-expected deficit projections, claiming that this is proof that Bush's massive tax cuts are successfully stimulating the economy.
But economists disagree. And not economists from some liberal think tank, but from the non-partisan Congressional Budget Office.
An analysis of Treasury data prepared last month by the Congressional Research Service estimates that economic growth fueled by the cuts is likely to generate revenue worth about 7 percent of the total cost of the cuts.
"Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that," Alan Viard, a former Bush White House economist now at the nonpartisan American Enterprise Institute, told the Washington Post.
http://jabbs.blogspot.com/2006/10/economists-disagree-with-bush-on.html