Higher Taxes Hurt Job Creators? That’s Malarkey.


The American Prospect is carrying the Robert Reich article Higher Taxes Hurt Job Creators? That’s Malarkey.  The following quote explains some of Reich’s reasoning:

The economy did just fine during the three decades after World War II, when the top tax rate never fell below 70 percent. Average yearly economic growth was higher in those years than it’s been since, when taxes on the rich have been far lower.

Bill Clinton raised taxes on the rich and the economy did wonderfully well. George W. Bush cut them and the economy slowed.

The real job creators are America’s vast middle class, whose spending encourages businesses to expand and hire—and whose lack of spending has the opposite effect.

The argument for tax increases for the wealthy is strengthened if you can explain the mechanism by which such tax increases help the economy.

If we only argue that historically, during high taxes the economy has done fine, then people could dismiss this as just a coincidence.  If you can explain why it is true that the economy does well with higher taxes, then it is harder to dismiss the argument.

It might also be pointed out that most of the liquidity that the Fed is trying to pour into the economy to stimulate the economy is sucked right up by the wealthy who put it to use in non-productive financial chicanery.

If we taxed this money away and put it into the economy as a fiscal stimulus, then the economy would recover faster and the deficit would be eliminated.

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